Starting January 1, 2025, a new law in California changes the rules around who can legally perform small home improvement jobs. Thanks to Assembly Bill 2622, unlicensed contractors are now allowed to take on projects up to $1,000, up from the previous $500 cap.
That may sound like a win for both homeowners and handypeople — and in some ways, it is. But there’s an important caveat: just because the law now permits certain types of unlicensed work doesn’t mean it’s the safest or smartest choice.
Whether you’re a homeowner trying to save money or a contractor thinking about skipping the license process, it’s worth asking:
Does licensing still matter in a post-exemption era?
Absolutely — and here’s why.
What Does the $1,000 Exemption Actually Mean?
The new exemption allows individuals without a contractor’s license to legally perform work up to $1,000, so long as:
- No building permits are required
- The worker is not employing others
- The combined cost of labor and materials doesn’t exceed $1,000
- The individual clearly states they are
not a licensed contractor in any ads or communications
In theory, this makes it easier and more affordable for homeowners to find help for small fixes — and gives handypeople the chance to take on more jobs without risking fines or legal trouble.
But there are limitations. Serious ones.
🔗 Official CSLB Announcement on AB 2622
5 Reasons Why Licensing Still Matters in 2025
Even with this new legal wiggle room, contractor licensing remains the gold standard for safety, professionalism, and accountability.
Here’s why it shouldn’t be overlooked:
1. Licensing Is About Accountability
A licensed contractor isn’t just someone who passed a test — they’re someone who has met California’s rigorous legal, educational, and experience requirements.
They're accountable to the Contractors State License Board (CSLB), and that means:
- Their work is monitored and regulated
- They can be reported if something goes wrong
- They’re held to consistent, professional standards
Unlicensed workers, even under the exemption, don’t answer to anyone. That’s a big risk for homeowners who have no legal recourse if the work is botched or never finished.
2. Licensed Contractors Carry Insurance (And That Protects You)
Home projects can get messy — literally and legally. If a contractor damages your property or gets injured on your premises, you could be held financially responsible unless they carry proper insurance.
Licensed contractors typically have:
- General liability insurance (to cover property damage)
- Workers’ compensation (if they have employees)
Without these protections in place, your homeowner’s policy might not be enough. That could leave you on the hook for repairs, lawsuits, or medical bills.
3. Permits and Inspections Are Still Mandatory for Many Projects
The $1,000 exemption does not apply to jobs that require a permit — which includes a wide range of home improvement work, from electrical rewiring to installing a new water heater.
And only a licensed contractor can legally pull those permits.
If you hire someone under the exemption for work that actually requires permits:
- Your job may be considered
illegal construction
- You could face fines from your city or county
- It could complicate selling or insuring your home later
4. You Can’t Put a Price Tag on Peace of Mind
Even for smaller jobs — fixing drywall, patching a roof, or replacing a toilet — hiring someone who’s licensed gives you confidence in their skill and experience.
Licensed contractors must demonstrate:
- Verified years of hands-on experience
- Knowledge of trade regulations
- Professional ethics and business practices
While there are many honest, skilled handypeople out there, licensing gives you a paper trail, a process, and protections. That peace of mind is worth more than a quick $200 savings.
5. Scammers Are More Active Than Ever — Licensing Helps You Spot the Real Pros
Unfortunately, loosening restrictions often creates more room for fraudsters to operate in the gray zone.
Even under the $1,000 cap, unlicensed individuals are legally required to disclose that they’re unlicensed in all advertisements. Many don’t. And those that cross the line into bigger jobs without the right credentials are operating illegally, plain and simple.
When you verify someone’s CSLB license, you’re checking for:
- Active status
- Bond and insurance coverage
- Any disciplinary actions or violations
It takes two minutes to do and could save you thousands in headaches later.
🔗 CSLB’s “Scam Stopper” Consumer Resource
But What If It’s “Just a Small Job”?
Sure, you might be tempted to skip the formalities for a simple fix. And sometimes, that’s okay.
But remember — small jobs can turn into big ones fast:
- A $900 deck repair might uncover dry rot
- A basic faucet swap might reveal plumbing issues
- That new outlet might not be up to code
Once the scope changes, you’re in risky territory without a licensed pro.
If You're a Contractor: Why Get Licensed Anyway?
Maybe you’re a skilled handyman who’s been doing honest work for years. The $1,000 exemption might feel like the green light you’ve been waiting for.
But here’s the hard truth:
- You
can’t pull permits without a license
- You’ll miss out on
larger, more profitable jobs
- You can’t legally advertise or operate above $1,000
- You’re stuck in a gray zone that limits your growth
A CSLB license opens doors to commercial work, bigger paydays, and higher trust with customers. Plus, you can get properly insured, which makes clients far more likely to hire you.
FAQs
FAQs: Licensing in the Era of AB 2622
Q: Does this mean I can hire a friend for odd jobs under $1,000 without worrying?
Yes — but only if the job doesn’t require permits, and they clearly state they’re unlicensed.
Q: Can I sue an unlicensed contractor if something goes wrong?
You can, but without CSLB oversight, your options for resolution are limited.
Q: What’s the best way to check if a contractor is licensed?
Visit the CSLB License Lookup Tool and search by name or license number.
Q: Is a city business license the same thing?
No. Business licenses allow someone to operate legally in a specific city. A CSLB license is required for contracting work across California.
Final Thoughts: Trust the License — It Still Matters
The $1,000 exemption makes small repairs more accessible. That’s a win for many Californians. But it doesn’t replace the trust, protection, and professionalism that comes with hiring a licensed contractor.
Whether you’re a homeowner looking for peace of mind or a tradesperson building a business, the license isn’t just a formality — it’s a foundation.
Protect Your Projects with the Right Insurance
At 1099 Insurance Broker, we work closely with licensed contractors across California, helping them:
- Meet legal insurance requirements
- Secure general liability and workers’ comp policies
Stay compliant while growing their business
Get the Coverage You Need
If you're a contractor looking to get covered — or a homeowner who wants to verify coverage before hiring — we’re here to help you make informed, protected choices.
