Advertising and subcontracting
What you put on your truck, website, and contracts is regulated, and so is who you hire for parts of a job. This lesson covers license numbers in advertising, home improvement salesperson registration, the scope limits of A, B, B-2, and C licenses when you take or give out subcontracts, and the penalties for unlicensed contracting. On the exam, watch for the B contractor's two-trade rule and the ‘no license, no pay’ rule.
License number in advertising
Every licensee must include its license number in all construction contracts, in subcontracts and calls for bid, and in all forms of advertising (B&P §7030.5).
‘Advertising’ includes business cards, contract proposals, signs, billboards, lettering on vehicles, brochures, pamphlets, circulars, newspapers, magazines, airwaves, any electronic transmission such as a website or social media post, and any directory listing under ‘Contractor’ or similar words (16 CCR §861).
| Vehicle rule | What must be shown | Minimum size |
|---|---|---|
| Most licensees, on each commercially registered vehicle used in the business (§7029.6) | Business name and license number, clearly visible | 72-point type, or 3/4 inch high and wide |
| C-36 Plumbing, C-45 Sign, and C-57 Well Drilling contractors (§7029.5) | Name, permanent business address, and license number on each side of each vehicle (also on water well drill rigs) | Letters and numbers at least 1½ inches high |
What an ad may and may not say
- Advertise only in the classifications you hold. A licensed A or B contractor may advertise as a ‘general contractor’ (§7027.1(a)).
- Anyone who advertises as a contractor, or lists in a construction directory, is subject to the license law even if their work would otherwise be exempt (§7027).
- An ad that says ‘insured’ must name the type of insurance, such as commercial general liability or workers' compensation (§7027.4(a)).
- Do not advertise ‘bonded’ when it refers to the contractor's license bond or a disciplinary bond (§7027.4(b)). Referring to any required bond in advertising is grounds for suspension (§7071.13).
- Do not use a public official's name or position without written authorization. If authorized, a printed ad needs a disclaimer in at least 10-point bold type (§7190).
- Ads for asbestos removal must show the contractor's asbestos certification and registration numbers (§7099.11).
- A promotional gift to a prospective customer may be worth no more than $5, only one per transaction, and it cannot depend on signing a contract (§7157(b)).
- Do not offer an owner any payment or reward for referring home improvement business to others (§7157(a)).
Unlicensed advertising
It is a misdemeanor to advertise construction work without a valid license in the classification advertised. The fine is $700 to $1,000, in addition to any other punishment (§7027.1). The only exception is minor work: an unlicensed person may advertise jobs under $1,000 only if the ad states that the person is not licensed (§7027.2).
When a person advertises in an alphabetical or classified directory (such as a phone directory) without the proper license, the Registrar may issue a citation with an order of correction. It orders the person to stop the ad and to tell the phone company to disconnect the number in the ad. If the person contests it, a hearing must be offered within 90 days. If the person still does not comply after the order is final, the Public Utilities Commission orders the phone service disconnected (§7099.10).
Worked example
Fix this ad
- A C-10 electrical contractor's website says: ‘Bonded and insured. Kitchen and bath remodels, electrical upgrades.’ No license number appears.
- The license number must appear in all advertising, including websites (§7030.5; 16 CCR §861).
- Kitchen and bath remodels are outside the C-10 classification, so that part of the ad is not allowed (§7027.1).
- ‘Insured’ must name the type of insurance, and ‘bonded’ may not refer to the license bond (§7027.4).
Add the license number, advertise only electrical work, name the insurance type (for example, ‘general liability insurance’), and remove ‘bonded.’
Home improvement salespersons (HIS)
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