Business Lawyers Blog
Seven laws took effect in California this year that will affect the construction industry. Contractors must stay updated on these changes and create procedures to ensure compliance. The state of California is increasing its oversight of the construction sector, giving the Attorney General the authority to file enforcement actions and requiring the industry to notify consumers of their right to cancel a contract by email. Any violation of these regulations could jeopardize your license.
Below, our Los Angeles construction attorneys review the most significant changes.
Attorney General Enforcement of Contractors State Licensing Board Penalties
The Contractors State Licensing Board (CSLB) currently has the power to act when contractors fail to pay vendors for services or materials or when they intentionally harm others. A new law (AB 1002) creates another enforcement mechanism, empowering the state’s Attorney General to seek discipline by filing a civil lawsuit. Under the law, the Attorney General can seek to suspend or even revoke a contractor’s license.
Making It Easier for Consumers to Cancel Contracts
AB 1327 has updated the cancellation process for consumers. Up to this point, consumers may cancel a contract within five days by sending a cancellation by mail or by hand delivery.
Beginning in 2026, consumers can now cancel via email. Businesses will need to include their email address and phone number when notifying consumers of their right to cancel via email.
Penalties for Workers’ Comp Violations Set to Increase
Another law (SB 291) increases the penalties for contractors who do not purchase workers’ compensation insurance. Historically, many contractors have falsely claimed to have no employees to avoid buying workers’ comp.
Minimum penalties for noncompliance will jump to $10,000 for sole owners. Further, a workers’ compensation certificate will be required for license renewal. Reporting requirements also will increase.
Muralists Gain an Exemption from Licensing Requirements
Beginning in 2026, muralists do not have to become licensed. However, there are already disputes regarding how the law defines “muralist,” which means some businesses might press their luck and try to avoid mandatory licenses for things like stucco work.
New Disclosures Required when Using a Subcontractor
Currently, contractors do not have to notify homeowners when they use a subcontractor on a home-improvement contract. That changes in 2026. Now, contractors must include specific information about any subcontractor used.
The law is a response to many situations where a subcontractor placed a lien on a homeowner after not being paid. The notification requirement can help homeowners avoid a surprise lien and the headaches that go with it. Furthermore, the main contractor is still legally obligated to finish a project.
CSLB Penalties for Violations Will Increase
The minimum fines levied by the CSLB will increase beginning July 1, 2026. Currently, the minimum fine for an unlicensed contractor is $200, with the maximum $1,500. That will increase July 1. The minimum fine for unlicensed work will now be $1,500. Furthermore, the CSLB can adjust civil penalties every five years.
Exemption for Liability for Legal Fees
Recent court decisions threatened the CSLB’s solvency, potentially making the Board liable for legal fees and costs in certain lawsuits. A new law exempts the CSLB from liability in those situations.
Structure Law Attorneys Help Contractors Stay Compliant with California Construction Laws
Construction companies operating in California should take proactive steps to ensure that contracts, employee policies, insurance coverage, and subcontractor disclosures meet current legal standards. Working with experienced legal counsel can help contractors understand these requirements and implement procedures that reduce risk.
The attorneys at Structure Law Group LLP advise contractors, developers, and construction businesses on regulatory compliance, licensing matters, and construction-related disputes. For guidance on how the 2026 laws may affect a construction business, contact Structure Law Group to schedule a consultation with our Los Angeles construction attorneys.