California Contractor Crackdown: 7 New Laws Take Effect January-July 2026

California Launches Aggressive Contractor Enforcement in 2026

California contractors face the most significant regulatory overhaul in nearly two decades, with seven new enforcement laws taking effect between January 1 and July 1, 2026. The legislation dramatically expands state enforcement powers, raises penalties for unlicensed work from $200 to $1,500, and introduces $10,000-$20,000 fines for workers' compensation violations—creating an urgent compliance imperative for all San Diego County contractors operating in Pacific Beach, La Jolla, and Mission Beach.

AB 1002: Attorney General Gets Enforcement Authority (January 1, 2026)

Assembly Bill 1002 represents the most dramatic shift in contractor enforcement in California history. Beginning January 1, 2026, Attorney General Rob Bonta's office gained authority to file civil actions seeking license suspension or revocation against contractors with unpaid wage judgments, unsatisfied court orders, or violations of wage-payment injunctions. The dual-enforcement structure means San Diego contractors now face scrutiny from both the Contractors State License Board (CSLB) and the Attorney General's office—though the AG must provide CSLB 30 days' notice before filing suit.

SB 779: $1,500 Minimum for Unlicensed Work (July 1, 2026)

Senate Bill 779 raises minimum civil penalties for unlicensed contracting from $200 to $1,500—a 650% increase—effective July 1, 2026. The law establishes tiered minimums: $1,500 for unlicensed work violations and $500 for routine licensing infractions. Critically, SB 779 authorizes CSLB to adjust all minimum penalties for inflation every five years using the California Consumer Price Index. Between 2019-2023, administrative law judges reduced appealed fines by an average of 43%, totaling $3.7 million across San Diego County—a pattern this legislation aims to prevent.

Five Additional Laws Transform Contractor Operations

AB 1327 - Contract Modernization (January 1, 2026): All home improvement contracts must now include the contractor's email address, phone number, and general liability insurance carrier's phone number. The mandatory "Right to Cancel" form must state that email cancellation is permitted.

SB 517 - Subcontractor Disclosure (January 1, 2026): Contractors must disclose subcontractor use in all home improvement contracts. For subcontractors performing more than 50% of project costs, the contract must include the subcontractor's name and contact information. Upon homeowner request, contractors must provide all subcontractors' license numbers and classifications. These requirements complement recent density bonus compliance measures affecting Pacific Beach projects.

SB 291 - Workers' Compensation Penalties (January 1, 2026): Sole owner licensees face minimum $10,000 fines per violation for employing workers without workers' compensation coverage, while partnerships, corporations, LLCs, and tribal businesses face $20,000 minimum penalties—with subsequent violations reaching $30,000 per occurrence.

AB 521 - CSLB Bond Liability Protection (January 1, 2026): Exempts CSLB from attorney fee and cost liability in civil actions involving contractor cash deposits, protecting the board's licensee-funded revenue from exposure affecting approximately 300 current deposits.

SB 456 - Muralist Exemption (January 1, 2026): Artists who draw, paint, apply, execute, restore, or conserve murals are exempt from contractor licensing requirements, provided the work qualifies as a "unique work of fine art." The exemption does not cover wall preparation or affixed scaffolding.

What Pacific Beach Homeowners Should Verify

Before hiring any contractor for home improvement projects in Pacific Beach, La Jolla, Mission Beach, or Bird Rock, homeowners should verify: (1) Active CSLB license status at CSLB.ca.gov, (2) Current workers' compensation insurance coverage, (3) Proper contract format including email address, phone number, and insurance carrier contact information, (4) Subcontractor disclosure statements, and (5) Clear email cancellation language. The City of San Diego requires contractor and subcontractor verification for all development services permits, with enforcement including inspection suspensions and Stop Work Orders for non-compliance.

Frequently Asked Questions

What is the penalty for hiring an unlicensed contractor in California starting July 1, 2026?

Beginning July 1, 2026, unlicensed contractors face a minimum civil penalty of $1,500 per violation under SB 779—a 650% increase from the previous $200 minimum. Homeowners who hire unlicensed contractors have no access to the CSLB complaint resolution process or legal protections. Always verify contractor licenses at CSLB.ca.gov before signing any contract.

Can the California Attorney General now suspend contractor licenses for wage violations?

Yes. AB 1002, effective January 1, 2026, authorizes Attorney General Rob Bonta's office to file civil actions seeking license suspension or revocation against contractors with unpaid wage judgments or violations. The AG must provide CSLB 30 days' notice before filing, and CSLB may intervene within 60 days.

What new information must appear in California home improvement contracts in 2026?

Under AB 1327 (effective January 1, 2026), all contracts must include: contractor's email address, phone number, general liability insurance carrier's phone number, and statement that email cancellation is permitted. SB 517 requires disclosure of subcontractor use, with names and contact information for subcontractors performing more than 50% of project costs.