Advertising is a vital component of any successful business, but for licensed contractors, promotional content comes with a special set of legal provisions. Failure to comply with these provisions can result in considerable fines and, in some cases, further legal action. Therefore, it is critical for all California contractors to know what constitutes advertising, which specifications are required for different types of promotions, and how to report unlawful advertising activity to the Contractors State License Board (CSLB).
Contractor Advertising: What's Included?
The legal definition of "advertising" for contractors covers a broad range of products and activities. According to CSLB, the following items constitute advertising and are subject to statewide specifications:
- Any TV, radio or print ads promoting your company;
- Promotional items bearing your company name and/or logo, such as t-shirts, magnets, coffee mugs, etc;
- Company business cards;
- Signs, billboards and lettering identifying your status as a contractor, including that used on trucks and other vehicles;
- Contract proposals;
- Electronic communications and web content;
- Brochures, newsletters and online advertisements circulated for soliciting purposes; and
- Listings and directories indicating your status as a contractor seeking any type of business that requires a contractor license under California law.
Together with all construction contracts, subcontracts and calls for bid, these advertising items require inclusion of the contractor's license numbers according to Section 861 of CSLB Rules and Regulations. Failure to comply with this requirement can result in an initial fine ranging between $100 and $1,000.
Advertising Regulations: The Fine Print
Besides including contractor license numbers on all forms of contractor advertising, CSLB regulations stipulate additional requirements for various activities and services. These include varying rules for business vehicle identification, bonding advertisements, asbestos removal, false or misleading advertising, and any advertising activity performed by unlicensed contractors. The following breakdown includes detailed requirements for each of these topics:
Business Vehicle Identification
- All licensed contractors are required to include both their business names and contractor license numbers on all commercial vehicles. Both must be presented clearly and in letters at least ¾ inch in height and width, according to Cal. Bus. & Prof. Code § 7029.6.
- For C036 Plumbing, C-45 Sign and C-57 Well-Drilling contractors, vehicle identification must include a permanent business address in addition to the above mentioned information. According to Cal. Bus. & Prof. Code § 7029.5, these items must appear on all sides of the vehicle in letters at least 1 ½ inches high
False, Misleading or Beyond Scope Ads
- Cal. Bus. & Prof. Code § 7161 provides that false, misleading or deceptive advertising is a misdemeanor. Such advertising might include content designed to promote home or other improvements that could result in loss or injury to the public, any claims that cannot or will not be honored by the contractors in question, and any claims that are not illegal and non-compliant with the Federal Trade Commission.
- In addition to false advertising, Cal. Bus. & Prof. Code § 7027.1 also forbids contractors to advertise beyond their scope of licensure.
- Violations relating to false advertising carry a penalty of $700 to $1,000, plus any additional punishment deemed necessary by a court or the Registrar.
The law prohibits advertisements or other promotions stating that you are bonded. This law, established in Cal. Bus. & Prof. Code § 7071.13, is intended to prevent any misunderstanding on the part of the public concerning protections implied by a contractor's bonded status.
All ads for asbestos removal must bear the same specifications listed above, as well as both a CSLB asbestos certification number and an asbestos work registration number (as required under Cal. Labor Code Section 6501.5). Violations carry a civil penalty of $100-$1,500, and will result in citation.
Reporting Unlicensed Operators
Anyone can advertise contracting services; but only licensed contractors are legally permitted to do so. Contractors who fail to comply with CSLB regulations may be suspected of illegal operation: therefore, it is critical to follow all advertising specifications-and to report advertising and/or work performed by any unlicensed contractors to the CSLB. Unlicensed contractors face citation, fine and other possible penalties, including ordered cessation of unlawful advertising and disconnection of any phone numbers associated with their business. To report an unlicensed contractor, contact the CSLB at (800) 321-CSLB (2752).
If you are a California contractor that would like assistance in reviewing and complying with state advertising regulations, get in touch with our experienced team of Construction Law trial lawyers by calling (925) 935-3300. Our Construction Law Practice Groupis here to answer your questions and help protect your business.
For additional information regarding the latest news and legal developments impacting the California construction community, please visit our construction law blog, The Critical Path.
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