California SB 342: lapsed license no longer wipes out pay on commercial jobs
From January 1, 2027, on public works, commercial and 4+ unit multifamily jobs, a California contractor whose license lapses can still be paid for work done while licensed. (source: SB 342 bill text (Chapter 967, Statutes of 2026) (opens in a new tab))
What changed
SB 342 changes Business and Professions Code 7031 from January 1, 2027. (source: SB 342 bill text (Chapter 967, Statutes of 2026) (opens in a new tab))
It covers public works, commercial and institutional projects, and common interest developments or multifamily buildings with 4 or more units where no tenant or resident is a party to the contract. (source: SB 342 bill text (Chapter 967, Statutes of 2026) (opens in a new tab))
On those jobs, a contractor who was licensed when the contract was signed can still collect for the work done while licensed. The owner can only claw back pay for work done while the license had lapsed. (source: SB 342 bill text (Chapter 967, Statutes of 2026) (opens in a new tab))
Homeowner jobs are unchanged: an unlicensed contractor still can't sue to get paid, and you can still seek back what you paid. (source: SB 342 bill text (Chapter 967, Statutes of 2026) (opens in a new tab))
Affected pages
Sources and last verified
Always confirm with the Contractors State License Board (opens in a new tab).