AB 1002: California AG Can Now Revoke Contractor Licenses for Wage Theft

What Changed on January 1, 2026

Before AB 1002, the California Attorney General could go after wage-stealing contractors with restitution orders, civil penalties, and injunctions. What the AG could not do was touch a contractor's license. That enforcement gap meant contractors could rack up wage theft violations, pay fines, and keep operating with a valid CSLB license, sometimes for years.

AB 1002 (authored by Assemblymember Jesse Gabriel, signed by Governor Newsom on October 10, 2025) closes that gap. The law amends Business and Professions Code Section 7036 to give the Attorney General a direct path from wage violation to license discipline. For the first time, the AG's office can file a civil lawsuit asking a court to order the CSLB registrar to suspend, revoke, or deny a contractor's license.

The press release from the AG's office specifically named companies like West Coast Drywall & Company, which had settled federal Department of Labor cases multiple times for wage violations yet continued operating with a clean license. That pattern ends under AB 1002.

"Wage theft" sounds like some lowlife pocketing a laborer's paycheck, but in construction it's usually more mundane, and more common, than that. Prevailing wage miscalculations on public works jobs, where the sub uses the wrong classification or misreads the wage determination. Overtime on 10-hour days not computed correctly under California's daily overtime rules. Workers classified as 1099 independent contractors when they're clearly W-2 employees under California's ABC test. Travel time between job sites not paid. Meal and rest period premiums skipped on days the crew "worked through lunch." These are the violations that fill DOL back-wage orders and DLSE citations, and under AB 1002, any of them can now put a contractor's license on the chopping block. If your sub runs crews, the odds they've tripped at least one of these wires are higher than you'd like to think.

What AB 1002 Actually Does

The bill adds new enforcement authority to Business and Professions Code Section 7036. Three categories of conduct can now trigger license discipline through AG civil action:

The CSLB Coordination Process

AB 1002 builds in a coordination mechanism between the AG and the CSLB:

1. 30-day notice: The AG must notify the CSLB registrar at least 30 days before filing a civil complaint. (Failure to notify is not a defense for the contractor, though.)
2. 60-day intervention window: After the AG files, the CSLB has 60 days to intervene in the action. After that window, the board can still seek leave of court to intervene for good cause.
3. Binding outcome: If the CSLB does not intervene and the AG prevails, the CSLB is bound to revoke or deny the license as the court orders.
4. Parallel proceedings: The CSLB retains authority to independently investigate and pursue its own administrative discipline simultaneously.

The Good Faith Defense

The law includes one narrow defense: a "good faith mistake regarding which wage rate applies" does not constitute a violation. This protects contractors who genuinely miscalculated a prevailing wage determination or misidentified a job classification, but it won't save anyone who systematically underpaid workers or ignored a wage judgment.

How Fast Can the AG Act?

Civil litigation isn't instant. Filing a lawsuit, serving the contractor, and getting a court order takes months, not days. But that's cold comfort for GCs planning 12-18 month projects. The AG files suit today, and your sub's license could be suspended before your project reaches substantial completion. The 30-day CSLB notice period and 60-day intervention window add structure, but the timeline from filing to court-ordered suspension could be as short as 3-6 months for egregious cases where the facts are clear and the wage judgment is already unsatisfied.

The Enforcement Chain: DOL / DLSE → AG → CSLB

What makes AB 1002 consequential for GCs is the connection it creates between wage enforcement data, both federal and state, and license status. The AG can act on findings from the federal DOL Wage and Hour Division and the state Labor Commissioner (DLSE). That second part matters more than most people realize: state-level DLSE wage claims are far more common in California construction than federal WHD investigations. A disgruntled crew member filing a DLSE complaint is a routine Tuesday — but under AB 1002, a pattern of those complaints can now feed directly into an AG civil action against the sub's license. Here's how the chain works:

Before AB 1002, federal wage violations and state license status existed in separate silos. A contractor could accumulate hundreds of thousands of dollars in DOL back-wage orders and still hold an active, clean-looking CSLB license. The AG's office had no mechanism to connect those dots. Now they do.

For a deeper look at how DOL back wage orders work and what the enforcement data contains, see our full guide.

The Numbers: $53.6M in CA Construction Wage Violations

How big is the pool of contractors now exposed to AG action under AB 1002? SiteVetter's California Contractor Compliance Report 2026 cross-referenced all 245,883 CSLB licenses against federal enforcement databases. The DOL wage violation numbers are striking:

Among those 2,603 cases, 146 are flagged as repeat offenders, contractors with multiple DOL enforcement actions. Under AB 1002, these repeat violators are the most likely targets for AG civil action. A contractor who's already ignored multiple back-wage orders is exactly the "bad actor" the AG's press release described.

The average case involves $37,706 in back wages, but the distribution is heavily skewed. Some contractors owe six figures. A drywall contractor with $824,000+ in back wages for 680 workers, for example, is the textbook profile for an AG enforcement action under the new law.

GC Risk: What Happens When Your Sub Loses Their License Mid-Project

For GCs, the direct risk isn't that you get your license pulled under AB 1002. It's that your subcontractor does. And the downstream consequences of a mid-project license loss are severe.

The Immediate Problem

Under Business and Professions Code Section 7028, contracting without a license is a misdemeanor. Once a sub's license is suspended or revoked, they cannot legally perform work. If they continue, both the sub and any GC who knowingly allows it face criminal exposure.

The Cascade Effect

• Work stops immediately. You cannot use an unlicensed sub on a permitted project. The building department can issue a stop-work order.
• Replacement costs spike. Finding a qualified replacement sub on short notice means paying 25-50% total cost premiums when you factor in mobilization, schedule cascade, admin overhead, and owner relationship damage. On a $150K drywall package, replacing your sub mid-project could cost an additional $40-75K in direct and indirect costs.
• Schedule delays compound. Mobilization for a replacement sub adds 2-4 weeks minimum. On a phased project, that delay cascades to every downstream trade.
• Insurance gaps emerge. Work performed by an unlicensed contractor may void your general liability coverage and CGL additional insured protections.
• Lien rights are affected. Under B&P Code 7031, unlicensed contractors cannot enforce contracts or file mechanics' liens, but the chaos of sorting that out mid-project creates its own costs.

This isn't hypothetical. The AG's office specifically cited contractors who had settled DOL cases multiple times while maintaining valid licenses. AB 1002 was written to close that loophole — and the first enforcement actions are a matter of when, not if.

How to Screen for Wage Theft Risk Before Hiring

AB 1002 turns DOL and DLSE wage violation data from a "nice to check" into a "must check." A contractor's wage history, both federal and state, is now a leading indicator of license stability. Here's a practical screening framework:

Step 1: Check DOL and DLSE Enforcement Records

The federal DOL publishes enforcement data at enforcedata.dol.gov. Search by employer name to find back-wage orders, civil money penalties, and the number of affected workers. For state-level records, check the California Labor Commissioner's DLSE databases for wage claim adjudications and citations. Any hit in either system warrants further investigation.

Step 2: Assess Severity

Not every DOL record is equal. Use these thresholds to triage risk:

• High risk (likely AG target): Multiple violations, back wages over $100K, repeat offender flag, or combined with other federal enforcement records (OSHA, SAM.gov)
• Medium risk (investigate further): Single violation with back wages over $25K or more than 20 workers affected
• Lower risk (monitor): Single older violation, small dollar amount, resolved with payment

For more on severity assessment, see our guide to contractor red flags in federal databases.

Step 2b: Apply the Go/No-Go Decision Framework

Severity tiers tell you how worried to be. But GCs need a binary decision: do I hire this sub or not? Here's a practical framework for DOL or DLSE findings:

The key variable is resolution status. A sub who got hit with a $30K back-wage order in 2022, paid it, and has been clean since is a fundamentally different risk profile than a sub with a $30K open order from last year. One made a mistake and fixed it; the other is exactly the kind of "bad actor" the AG is gearing up to pursue.

Step 3: Cross-Reference with CSLB Status

Check the contractor's current CSLB license status. If the license shows any pending disciplinary action, complaints, or bond/insurance issues alongside DOL violations, the risk profile compounds significantly.

Step 4: Add Wage Theft Screening to Your Prequalification Process

If you don't already include DOL enforcement checks in your subcontractor prequalification process, AB 1002 makes that an urgent update. Add both federal DOL and state DLSE checks to your prequalification form as a pass/fail criterion, or at minimum, a required disclosure.

Step 5: Add Contractual Protections

Screening catches what's already on the record. For ongoing protection, update your subcontract language:

• Wage compliance representation: Require the sub to represent that they have no pending wage claims, unsatisfied wage judgments, or DOL/DLSE enforcement actions, and make material misrepresentation grounds for termination.
• License maintenance clause: Require immediate written notice if the sub receives any AG complaint, CSLB action, or court filing that could affect their license status.
• Termination for license loss: Include an explicit right to terminate for cause if the sub's license is suspended, revoked, or becomes subject to a pending AG civil action under AB 1002.

Frequently Asked Questions

When did AB 1002 take effect?

January 1, 2026. The bill was signed by Governor Newsom on October 10, 2025 (Chapter 567, Statutes of 2025).

Can the AG revoke a license without a court order?

No. AB 1002 authorizes the AG to file a civil lawsuit seeking license discipline. A court must issue the order directing the CSLB registrar to suspend, revoke, or deny the license. This is a judicial process, not an administrative shortcut.

What's the good faith wage rate mistake defense?

The law provides that a "good faith mistake regarding which wage rate applies" is not a violation. This covers genuine prevailing wage calculation errors or job classification mix-ups. It does not cover systematic underpayment, ignoring wage judgments, or violating court orders.

Does AB 1002 apply to out-of-state contractors working in California?

If the contractor holds a CSLB license (required for work in California), the AG can seek discipline against that license. The law applies to the license, not to where the contractor is headquartered.

How is this different from existing CSLB enforcement?

The CSLB already had authority to discipline contractors for various violations. AB 1002 gives the Attorney General's office independent authority to pursue license discipline specifically for wage theft, a power previously limited to the CSLB. The AG's office has broader investigative resources and can coordinate with DOL and DLSE data that the CSLB may not have been tracking.

Should GCs be worried about their own licenses under AB 1002?

If you pay your direct employees correctly, AB 1002 doesn't target your license. But there's a gray area worth flagging: GCs who use labor brokers or staffing agencies with wage compliance issues could face scrutiny if the AG views the arrangement as a mechanism to evade wage obligations. The primary GC risk remains indirect: your sub loses their license and your project is disrupted. Either way, the answer is the same: screen your subs' wage history before you hand them a subcontract.

Legal References and Resources

• AB 1002 (Gabriel, 2025) — Chapter 567, Statutes of 2025. Amends Business and Professions Code Section 7036.
• AG Bonta Press Release: Bad Actor Licensed Contractors Put on Notice
• DOL Enforcement Data Search
• DOL Back Wage Orders Explained
• California Contractor Compliance Report 2026
• Contractor Red Flags in Federal Databases
• Subcontractor Prequalification Checklist
• SB 440: Change Order Payment Act 2026