A pending criminal charge does not automatically suspend a California contractor's license. A conviction for a crime substantially related to contracting is a cause for discipline, and a willful or fraudulent act that substantially injures someone, or diverting project funds, is its own cause even without a conviction. A licensee must report any felony conviction, or a substantially related one, to the CSLB within 90 days of learning of it.
If you already hold a license: the 90-day report
If you already hold a license, Business and Professions Code section 7071.18 requires you to report, in writing to the CSLB registrar, within 90 days after learning of your conviction for any felony, or for another crime substantially related to the qualifications, functions, and duties of a licensed contractor. That duty applies whether or not CSLB finds out some other way, and it is separate from whatever happens later in a disciplinary case. This page is about that existing-licensee question. If you do not yet hold a license and want to know how CSLB evaluates an applicant with a past conviction instead, the firm's guide to a California contractor license with a felony covers the application-side rules in full, including the seven-year lookback and rehabilitation evidence CSLB considers for new applicants.
What actually counts as grounds for discipline
A conviction becomes a usable ground for discipline once a specific point is reached. Business and Professions Code section 7123 makes a conviction of a crime substantially related to a contractor's qualifications, functions, and duties a cause for disciplinary action, and the general conviction rule in section 490 lets a board act once the time to appeal has passed, the conviction has been affirmed on appeal, or an order granting probation suspends imposition of sentence. Section 490 treats a guilty plea or verdict, or a conviction following a no contest plea, as a conviction. Under section 493, the record of conviction is conclusive evidence that the conviction occurred, but only of that fact, and whether a crime is substantially related turns on criteria that include the nature and gravity of the offense, the years since it happened, and the nature and duties of the profession. A later order dismissing the conviction after probation under Penal Code section 1203.4 does not prevent the board from acting on the original conviction.
Fraud and theft have their own, separate triggers
Fraud and theft against a client do not need a criminal conviction at all to become a licensing problem, because the Contractors State License Law has its own separate grounds that track that conduct. Section 7116 makes a willful or fraudulent act by a contractor that substantially injures another person its own cause for discipline. Section 7108 separately makes it a cause for discipline to divert funds or property received for a specific construction project to another purpose, or to fail to substantially account for how that money or property was used on the project it was paid for. In practice, a client's deposit or progress-payment dispute, a criminal theft or fraud charge, and a CSLB complaint can all proceed on their own separate tracks over the same underlying facts, so a dismissal or acquittal in one does not automatically close the others. The criminal side of a deposit dispute is covered in the firm's guide to whether a contractor can be charged with theft for taking a deposit and not finishing the job.
How the disciplinary case itself proceeds
A formal disciplinary case against an existing license generally begins with a written accusation. Under Government Code section 11503, the accusation has to set out the acts or omissions charged in ordinary, concise language and identify the specific statutes and rules you are alleged to have violated, rather than just repeating statutory language. Under sections 11505 and 11506, you have 15 days after service of the accusation to file a notice of defense requesting a hearing; failing to file one waives the right to a hearing, although the agency may still grant one in its discretion. A hearing in a contested case is presided over by an administrative law judge under Government Code section 11512, and a case can also be resolved by a settlement the parties agree to under section 11415.60. Possible outcomes include probation with conditions, suspension, or revocation (Business and Professions Code sections 7090 and 7095), and reporting under section 7071.18 and formal discipline under these provisions are legally separate steps, so completing one does not excuse the other.
If the license is revoked or denied on reapplication
Losing a license is not necessarily permanent, but the path back depends on what happened. After a revocation, section 7102 bars reinstating or reissuing the license for a period of at least one year and up to five years after the final revocation decision, and then only on a showing that all loss caused by the conduct behind the revocation has been fully satisfied and every condition of the decision has been met, subject to a limited exception for debts discharged in bankruptcy. If a later application is denied because of a substantially related crime, section 7073 requires the board to tell the applicant the earliest date to reapply, which cannot be more than five years from the effective date of the decision or notice, and all competent evidence of rehabilitation must be considered on reapplication. Instead of denying an application, the registrar can issue a probationary license with conditions; if conduct during that probation would justify revoking it, the registrar must give the licensee 30 days to show cause why it should not be revoked. None of this is automatic, and how it applies depends on the exact disciplinary history and the registrar's decision in your case.
Records to bring to a license review
Bring your current license number and status, the criminal charging document, plea agreement, or judgment, any letter or accusation CSLB has already sent you, and the underlying contracts, invoices, and accounting for any project tied to a fraud or diversion allegation. If you are also facing a pending criminal case, ask whether your criminal defense lawyer and separate CSLB counsel should coordinate, since statements made in one proceeding can affect the other. For the broader financial and professional consequences a conviction can carry, see the firm's overview of licensing impacts from a California criminal case.
The Law Offices of David S. Chesley can discuss the California criminal charge and its possible effect on your contractor's license. Call (800) 755-5174.