The Assembly Appropriations Committee today approved SB 488, a bill by State Senator Nell Soto (D – Pomona) to enhance penalties for contracting without a license. Soto’s bill would also make it a misdemeanor for a contactor licensee to violate Workers’ Compensation insurance requirements.

“Unlicensed contractors do not pay their fair share of taxes, and their illegal activities place an unfair burden on law-abiding contractors as well as consumers,” Soto said.

According to the Contractors' State License Board (CSLB), there are many unlicensed contractors who operate in the underground economy, which compromises the financial security of legitimate businesses and deprives state and local governments of billions of dollars in unpaid taxes. Numerous approaches have been used to address this problem, but it continues to impact legitimate licensees and consumers.

SB 488 would increase the penalty for third and subsequent convictions for contracting without a license from a fine of $4,500 or 20% of the contract price (whichever is greater) and/or imprisonment in county jail for between 90 days and one year, to a fine of  up to $10,000 or 20% of the contract price (again, whichever is greater) and/or jail time.

In addition, the CSLB indicates that some licensees occasionally hire employees without obtaining workers compensation insurance coverage. Senator Soto’s bill would make it a misdemeanor to do so.