CSLB Letters of Admonishment Now Have Financial Consequences

The Contractors State License Board (CSLB) has released a new update for all contractors regarding letters of admonishment. A letter of admonishment is one of multiple forms of correction the CSLB can issue to contractors that violate Contractor License Law and/or the Business and Professions Code.

Previously, letters of admonishment were perceived as a warning to the contractor and did not result in financial penalties. The letter of admonishment itself was displayed on a contractor’s license for up to one year to inform the general public that there was/were a minor violation(s) that the contractor incurred, but that’s it. 

With this new update, if a contractor is given a letter of admonishment, the contractor is now legally obligated to pay back any industry expert costs that accumulate with their particular case. 

What is a Letter of Admonishment?

As previously stated, a letter of admonishment is a formal corrective action issued by the CSLB for minor violations of California’s contractor laws and regulations. It serves as a written warning rather than a more severe disciplinary action, like a citation or license suspension. When a contractor receives a letter of admonishment, they must comply with any remedial measures outlined by the CSLB, usually coming from the recommendation by a hired industry expert. 

In January 2023, the CSLB extended the amount of time a letter of admonishment appears on a contractor’s license; the letter of admonishment may be displayed for up to two years, should the CSLB deem that length of time necessary. This policy change was intended to increase transparency for the general public and ensure that consumers seeking contractors have greater access to disciplinary records.

Previous Impact vs. New Impact

Before this update, letters of admonishment had relatively small long-term consequences for contractors. Letters of admonishment were often seen as “a slap on the wrist” that did not heavily impact a contractor’s ability to attract new clients or be awarded bids. Additionally, consumers and industry professionals rarely viewed letters of admonishment as serious disciplinary actions. 

With the change in the law, contractors face more substantial consequences when receiving a letter of admonishment. The biggest consequence is the financial ramification associated with receiving a letter of admonishment. The costs associated with these expert evaluations are now the financial responsibility of the contractor receiving the letter of admonishment.

If you are unfamiliar with the Industry Expert Program, the CSLB created this unique program to address a backlog of consumer complaints they were receiving. One of the primary issues leading to this backlog was the difficulty in securing expert witnesses for contractor disputes. The CSLB enlists licensed professionals with relevant expertise to evaluate complaints and provide their expert testimony. 

Ultimately, the changes to the letter of admonishment were made to increase contractor accountability for minor infractions as well as allow the CSLB to continue their mission as a consumer protection against those acting in bad faith.