General building contractors usually oversee projects and coordinate the specific licensed subcontractors for a job. Specialty or subcontractors are usually hired to perform a single job. For example, if you want only roofing or plumbing work, you may want to hire a contractor licensed in that particular specialty.
A general building contractor may also contract for specialty work, but must hold a specialty license for that work or actually have a specialty contractor do the work. The only exception is if the job requires more than two types of work on a building. Then it is appropriate for a licensed general building contractor to contract for and oversee the entire project. For example, if your kitchen remodeling will involve plumbing, electrical and carpentry work under one contract, you should hire a licensed general building contractor. Under these circumstances, a general building contractor may perform all of the work on a building, or subcontract parts of the job to contractors with specialty licenses.
General contractors need to be careful of running afoul of these rules because the penalty might be that you can not get paid for the work because you are unlicensed for the work performed.
When in doubt about whether you are properly contracting contact an Orange County Construction Law Attorney.