I've just had a conversation with Linda Meridon of the City of San Jose Finance Department.
According to her, looking for contract work counts as running a business, and I need to apply for a San Jose business license.
Also, as I didn't apply when I started looking in August, I will be charged interest on the fees. And she wants a copy of my 2002 tax return.
Apparently, looking for full-time (W2) employment is fine, but if you say you'll accept contact work too, you need to register as a business.
This seems a classic example of the failure to apply leeway that Weinberger explains so well.