Yes, all the works above $500 ( both material and labor) need CSLB license, otherwise will be illegal.
Actually state license board have the people check around, they call it" sting operation", usually they will stay in an old house, and call several handymen from the ads in the newspaper. whoever shows, they need to see the license, otherwise get citation have to appear in court. usually this kind of operations are held together by CSLB and district attorney office. That means if these people don't have the licenses, they will be charged as misdemeanor which will have negative effects on green card application as well as the naturalization.
Call me if you need any help: (626)808-5961.
I speak Chinese.