Rebuilding in LA's Fire Zones: License, Bond, Workers' Comp, and Contract Rules for Contractors

Enforcement Is Already Underway

The Palisades and Eaton fires of January 2025 created a large rebuild market, and prosecutors have been using the felony law against unlicensed operators in both burn areas.

• Eaton fire (Altadena). On December 11, 2025, the Los Angeles County District Attorney announced felony charges against five unlicensed contractors, filed December 4. Each was charged with one count of contracting without a license in connection with a natural disaster.
• Palisades fire. In late June 2026, six people were charged with the same offense, according to reporting by FOX 11. The DA's investigators and the CSLB's Statewide Investigative Fraud Team found them through online ads that lacked contractor license numbers, then set up bid appointments at a Pacific Palisades home for an accessory dwelling unit and demolition work. None had a license or a pending application.
• County response. In September 2026, the Los Angeles County Board of Supervisors voted unanimously to direct a fraud-prevention plan and a public awareness campaign on verifying contractors.

If you are licensed, this is the environment in which owners and lenders will check you out. Expect them to verify your license, your bond, and your insurance before they sign.

What You Need to Work Legally

Workers' comp details that matter on a rebuild

CSLB requires workers' compensation proof as a condition of licensure and renewal unless you qualify for an exemption, and coverage is required with even one employee. Active C-8 concrete, C-20 HVAC, C-22 asbestos abatement, C-39 roofing, and C-61/D-49 classifications must carry coverage whether or not they have employees. Coverage must be continuous, and a lapse suspends the license. CSLB says any work performed while the license is suspended is considered unlicensed work.

That last point matters on a disaster rebuild, where unlicensed contracting is charged as a felony. Do not let a cancelled or non-renewed workers' comp policy sit unnoticed. California will also require workers' compensation for nearly every license class beginning January 1, 2028. Our guide to SB 216 and the 2028 deadline explains the exceptions.

The bond is not insurance for you

The $25,000 bond is filed for the benefit of consumers harmed by defective construction or other license law violations, and it protects employees owed unpaid wages. It does not protect your business, and the surety can seek reimbursement from you. Our license bond guide covers how it works.

Corporate and LLC licenses

CSLB lists additional items for LLC licensees, including liability insurance and an employee/worker bond. If your license is held by an LLC, check CSLB's current requirements for the amounts.

The Felony Rule in Plain English

Business and Professions Code section 7028.16 applies to a person who acts as a contractor without a license on repairs or improvements to residential or nonresidential property damaged or destroyed by a natural disaster for which the Governor proclaimed a state of emergency or the President declared an emergency or major disaster. The statute sets two tiers of punishment: a fine of up to $10,000, imprisonment, or both, and a lower tier of a fine of up to $1,000, up to one year in county jail, or both. The district attorney describes the felony as carrying up to three years in prison and a fine of up to $10,000. The same section treats the person who hired the unlicensed contractor as a victim, whether or not they knew the contractor was unlicensed.

Three practical takeaways for licensed contractors:

1. Check every subcontractor. Verify the license and workers' comp status on the CSLB license check before anyone starts work on your job.
2. Watch your own status. A lapsed bond or workers' comp policy can suspend your license, and CSLB treats work under a suspended license as unlicensed.
3. Court orders matter. For three of the Eaton defendants, the district attorney reports court orders barring them from advertising construction services without a license.

Advertising and Winning Trust

Business and Professions Code section 7030.5 requires licensed contractors to include their license number in construction contracts, subcontracts and calls for bid, and all forms of advertising. CSLB's bulletin reminds contractors that this covers websites and online postings, newspaper, radio and television ads, business cards, contracts, and promotional materials, and cites sections 7027, 7029.5, and 7030.5 and California Code of Regulations section 861. Under section 7029.6, CSLB says your business name and license number should be clearly visible on commercially registered vehicles in type at least 72 points high, about three-quarters of an inch.

CSLB also says:

• Advertise only for work within your license classification.
• Do not advertise that you are bonded. Direct owners to the CSLB license check instead.
• Civil penalties for advertising violations range from $100 to $5,000.

The Palisades sting started with ads missing license numbers, so a correct ad also helps owners and agencies tell you apart from unlicensed competitors.

Ways to earn trust that work in this market:

• License number everywhere. Website header, Google profile, social posts, truck lettering, bids, and every contract page that identifies you.
• Proof of insurance on request. Keep current certificates for general liability, workers' compensation, and commercial auto ready to send the same day. Owners and lenders often require them before signing.
• Written contracts. CSLB advises owners to get a detailed written contract and not to pay in cash. If you work that way by default, say so.
• Permits pulled in your name. Owners are told to confirm permits with the building department, so make that easy.
• Listing on official lists. The City of Los Angeles Bureau of Contract Administration maintains a Verified Contractor and Architect List for Palisades-area rebuilds, and applicants must have an active license.

Contract and Payment Rules for Rebuild Work

Business and Professions Code section 7151 defines "home improvement" to include the reconstruction, restoration, or rebuilding of residential property damaged or destroyed by a natural disaster for which the Governor proclaimed a state of emergency or the President declared an emergency or major disaster. As a result, home improvement contract rules apply to residential rebuilds in the burn areas.

• Written contract. The contract must be in writing and state the total price in dollars and cents.
• Down payment. No more than the lesser of $1,000 or 10 percent of the contract price. CSLB's example: on a project priced at $10,000 or more, the maximum down payment is $1,000. Section 7159.5 has limited exceptions, so read it before relying on one.
• Progress payments. Payments beyond the down payment require a written schedule in dollars and cents tied to specific work and materials, and you cannot request or accept more than the value of the work performed or materials delivered.
• Lien releases. If requested, you must provide lien releases for work already paid before the owner pays further.
• Right to cancel. CSLB says homeowners in a declared disaster area have seven business days to cancel without penalty. Civil Code section 1689.7 sets the notice language.
• Change orders. CSLB advises that contract changes be in writing and signed by both parties.
• Pricing. CSLB says raising prices by more than 10 percent in disaster areas is illegal. California's price gouging law, Penal Code section 396, limits increases above pre-emergency prices for repair and reconstruction services while its protections are in effect. Check the Attorney General's current page before pricing a job.

Violating the contract, down payment, or payment-cap rules is a misdemeanor with a fine of $100 to $5,000, up to a year in county jail, or both. In declared disaster areas, section 7159.5 directs the court to impose the maximum fine. For schemes to defraud owners, the court must order restitution based on the defendant's ability to pay and may add a fine of $500 to $25,000. CSLB also says violators can face license discipline.

Insurance Expectations Beyond the License

CSLB's licensing requirements are the bond and workers' compensation (plus liability insurance for LLCs), but contracts add more. Owners, lenders, and general contractors typically write general liability limits, additional insured wording, and who buys builder's risk into the contract. Our wildfire rebuild insurance guide covers builder's risk in fire hazard zones, ignition exposure under general liability, and hot work conditions. For license basics, see our California contractor license requirements guide.

A Pre-Bid Checklist

1. Confirm your license is active, in the right classification, with the bond and workers' comp showing as current on the CSLB license check.
2. Put your license number on every ad, bid, contract, and vehicle.
3. Verify each subcontractor's license and workers' comp status before they start.
4. Review your contract template against section 7159.5, the cancellation notice, and the written payment schedule.
5. Have certificates of insurance ready, and decide in writing who buys builder's risk.
6. Confirm which building department handles the address, the City of Los Angeles or the County, and what permit path applies.

This article is general information, not legal advice. For anything that affects your license, talk to CSLB or a construction attorney.

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