If you believe your (potential) contractor is unlicensed contact an experienced attorney to determine what rights you may have and visit the Contractor's State Licensing Board's website.
California's Contractor's State License Law is a comprehensive statutory scheme governing the construction business. It is codified in statute at Business & Professions Code section 7000 et seq. The State License Law provides "no person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action, or recover in law or equity in any action, in any court of this state for the collection of compensation for the performance of any act or contract where a license is required...." (California Business & Professions Code Section 7031.)
There are a couple of exceptions to that law. But basically, if the person who is performing work on your home or building is unlicensed and you refuse to pay them, the person cannot file a claim against you even if the work meets the standard of care (not deficient).
You should also know that if you do sue an unlicensed contractor, the unlicensed contractor cannot claim an "offset" for the work that he performed. (White v. Cridlebaugh (2009) 178 Cal.App.4th 506.)
California has set up a statutory scheme that is intended to help consumers. Contact Darwin Bustarde to discuss your options and to obtain substantive legal advice and representation. The general information described above provided to help prompt you to analyze whether you need to conduct further research or hire an attorney, and is not intended to be relied upon for you to take definitive legal action that may affect your rights.
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