Milt, if you do pay the $600 and demand refund of your penalty, make sure to check which is the right forum to challenge the late charge in. I don't think small claims court has jurisdiction over the contractor's board. There is probably an administrative law judge who hears disputes. In Minnesota you would make an appeal through the Office of Administrative Hearings. It looks like you have an OAH in California too.
OAH Home Check there and see if that's a better option than small claims. On the up side, administrative law judges are somewhat more likely to settle with you at a preliminary hearing when you're asking for a relatively small amount.