With the new year just around the corner, there are some changes that all our California contractors should know about. Below are some of the notable changes that will impact either yourself or a contractor you know. 

AB 2622: Handyman Limit Increase from $500 to $1,000

Updates to AB 2622, approved by Governor Newsom on September 14th, 2024 allow handymen in California to take construction projects totaling up to $1,000. The previous limit for handymen of $500 had not been updated since 2005. The work done by unlicensed handymen must be “casual, minor, and inconsequential,” according to the Contractors State License Board. 

Minimum Wage Increases to $16.50 Per Hour 

The statewide minimum wage increase to $16.50 per hour will apply to all employers, affecting payroll expenses for contractors with employees. For contractors who have employees, it is important to take this into consideration when planning for the financial future ahead. If you are curious what the difference between an independent contractor and an employee is, you can learn more about that distinction on the CA Department of Industrial Relations website. 

SB-988: Freelance Worker Protection Act 

Beginning January 1st, 2025, SB-988 will go into effect. This bill will require written contracts be provided to independent contractors who are hired for professional services that are equal to or greater than $250. This means that your subcontractor(s), even those that you may have hired previously, will now need to be supplied a formal written contract as opposed to only given a work invoice for a completed job. 

As 2025 progresses, there are some potential legislative changes from the CSLB to keep an eye out for as well. 

Accessory Dwelling Units (“ADUs”) may be added to the definition of “home improvement” in Contractor Law

As discussed in the December 12th CSLB board meeting, adding ADUs to the definition of "home improvement" in Contractor Law* will ensure that contractors engaging in ADU construction must fully comply with existing home improvement regulations. This includes adhering to contract requirements, disclosure obligations, and licensing and local permitting standards. 

*Contractor Law refers to the California Contractors License Law established by the California State License Board. The 2024 California Contractors License Law & Reference Book can be found directly from the CSLB website at no cost. 

Raises in Enforcement Fine Minimums

Potential updates to Business and Professions Code sections 7099.2 and 7028.7 will raise the minimum fines for violations, including unlicensed contracting activity and failure to comply with CSLB regulations. Contractors may face steeper financial penalties for non-compliance, increasing the financial risk of operating without proper licenses, insurance, or adherence to contract laws.