With the goal of creating a more “stable workforce” and addressing the “shortage of health care workers” in California, Gov. Gavin Newsom (D) has signed into law legislation that will increase the minimum wage for certain health care workers effective June 1, 2024.
SB 525 adds Sections 1182.14 and 1182.15 to the California Labor Code. The law creates five minimum wage schedules for certain health care workers depending on the nature of the employer. Sections 1182.14 and 1182.15 will preempt all local minimum wage statutes for health care workers until 2034.
Which employers are covered?
“Covered health care facility” is defined to include the following:
- Hospitals, including licensed general acute care hospitals, licensed acute psychiatric hospitals, and other special hospitals as defined under Section 1250 of the Health and Safety Code.
- Licensed Skilled Nursing Facilities that are owned, operated, or controlled by a hospital or integrated health care delivery system or health care system.
- Home Health Care, including licensed home health agencies as defined under Section 1727 of the Health and Safety Code and a patient’s home when health care services are delivered by an entity owned or operated by a general acute care hospital or acute psychiatric hospital.
- Clinics, including dialysis clinics, community clinics, psychology clinics, state-run clinics, rural health clinics, specialty care clinics, and urgent care clinics.
- Licensed Residential Care Facilities for the Elderly
- Psychiatric Health Facilities
- Mental Health Rehabilitation Centers
- Ambulatory Surgical Centers Certified for Medicare Participation
- Physician Groups
- County Correctional Facilities Providing Health Care Services
- County Mental Health Facilities
- Integrated Health Care Delivery Systems
Which employees are covered?
“Covered Health Care Employee” is defined to include any “employee”— regardless of formal job title — of a health care facility “who provides patient care, health care services, or services supporting the provision of health care.” This includes, but is not limited to, the following categories of employee:
- Nurses
- Physicians
- Caregivers
- Medical residents
- Interns
- Fellows
- Patient care technicians
- Janitors
- Housekeeping staff
- Groundskeepers
- Guards
- Clerical workers
- Nonmanagerial administrative workers
- Food service workers
- Gift shop workers
- Technical and ancillary services workers
- Medical coding and medical billing personnel
- Schedulers
- Call center and warehouse workers
- Laundry workers
- Patient aides
- Technicians
- Contracted and/or subcontracted employees
- Workers who are essential to both routine medical care and emergency response efforts
The legislation specifically excludes from coverage the following categories of employee:
- Outside salespersons
- Public sector employees whose primary duties are not health care services
- Employees who perform delivery or waste collection work on the premises of a covered health care facility (unless employed by the person who owns, controls, or operates the covered health care facility)
- Employees who provide medical transportation services for the covered health care facility (unless employed by the person who owns, controls, or operates the covered health care facility).
What are the minimum wage requirements?
As noted above, Sections 1182.14 and 1182.15 require “covered health care facilities” to raise the hourly minimum wage for covered health care workers annually starting June 1, 2024. In addition, covered health care facilities must also ensure that salaried employees earn a monthly salary equivalent to “no less than 150% of the health care worker minimum wage or 200% of the applicable minimum wage, whichever is greater.” The chart at the link below details the hourly minimum wage and assumes the applicable minimum wage ($15 per hour under Section 1182.12(b)) is less than the health care worker minimum wage for employees paid on a salary basis.
Covered Health Care Employer Type |
Defined |
Hourly Minimum Wage Requirements |
“Salary Basis” Employees |
|
Large Health Care Employers and Health Systems |
Any covered health care facility (a) with 10,000 or more full-time equivalent employees, (b) that is part of an integrated health care delivery system or health care system with 10,000 or more full-time equivalent employees, (c) that is a dialysis clinic, and (d) that is owned, affiliated, or operated by a county with a population of more than 5 million as of January 1, 2023. |
·June 1, 2024 to May 31, 2025, $23.00 per hour. ·June 1, 2025 to May 31, 2026, $24.00 per hour. ·June 1, 2026 to August 1, 2027, $25.00 per hour. |
· $71,760 a a · $74,880 a a a · $78,000 |
|
Hospitals |
Any covered hospital with high populations of Medicare/Medicaid patients, covered rural independent health care facilities, and covered health care facilities that are owned, affiliated or operated by a county with a population of less than 250,000 as of January 1, 2023. |
a a ·June 1, 2024 to May 31, 2033, $18.00 per hour, with 3.5 percent increases annually. a a a a ·June 1, 2033, $25.00 per hour. |
·2024 - $56,160 ·2025 - $58,125.60 ·2026 - $60,159.99 ·2027 - $62,265.59 ·2028 - $64,444.89 ·2029 - $66,700.46 ·2030 - $69,034.98 ·2031 - $71,451.20 ·2032 - $73,951.99 ·2033 - $76,540.31 a · $78,000 |
|
Primary Care, Free, Community, and Rural Clinics |
Covered primary care community or free clinics that are open for limited services of no more than 40 hours a week and that are not conducted or maintained by a government entity, covered community clinics along with any associated intermittent clinics exempt from licensure, covered rural health clinics, and covered urgent care clinics that are owned by or affiliated with a community clinic. |
·June 1, 2024 to May 31, 2026, $21.00 per hour. ·June 1, 2026 to May 31, 2027, $22.00 per hour. ·June 1, 2027 to August 1, 2028, $25.00 per hour. |
· $65,520 a a · $68,640 a a · $78,000 |
|
All Other Non-Specified Health Care Employers |
·June 1, 2024 to May 31, 2026, $21.00 per hour. ·June 1, 2026 to May 31, 2028, $23.00 per hour. ·June 1, 2028 to August 1, 2029, $25.00 per hour. |
· $65,520 a a · $71,760 a a · $78,000 |
|
|
Licensed Skilled Nursing Facilities |
·June 1, 2024 to May 31, 2026, $21.00 per hour. ·June 1, 2026 to May 31, 2028, $23.00 per hour. ·June 1, 2028, $25.00 per hour. |
· $65,520 a a · $71,760 a a · $78,000 |
Are waivers available to covered facilities?
Yes. If a covered health care facility is having difficulty with the new wage requirements, it can submit an application to the Department of Industrial Relations to obtain a waiver from compliance with the requirements. In doing so, the facility must demonstrate that compliance would “raise doubts about the covered health care facility’s ability to continue as a going concern under generally accepted accounting principles” or essentially jeopardize its operations. Specific factors considered include (1) closure of the covered health care facility or any affiliated entity; (2) closure of patient services or programs; (3) loss of jobs; (4) whether the facility is small, rural, frontier, or serves a rural catchment area; (5) whether closure of the facility would have a significant adverse effect on access to services in the region or service area; and (6) whether the facility is in financial distress that results or is likely to result in closure of the facility or any affiliated entity, closure of patient services or programs, or loss of jobs.
Additional information regarding the waiver program will be provided by the Department of Industrial Relations by March 1, 2024.
How should health care employers prepare for the new law?
- Determine whether your workplace falls within the definition of a “covered health care facility.”
- Determine which wage schedule applies to your workplace.
- Educate management and Human Resources regarding the new wage rates and varying phases.
- Review current wage rates for your covered health care employees to determine whether the wages are at least as high as the wage rates set forth in the applicable wage schedule.
- For your covered employees who are paid on a salary basis, determine whether their current salaries need to be increased to meet the new law’s exemption from overtime pay.
- Review and analyze financial budgets and the impact of the new wage schedule on the overall compensation of the organization.
- Increase wage rates or salaries for covered health care employees where necessary.
- Issue Labor Code Section 2810.5 notices to all covered health care employees who receive a wage increase to comply with the law.
- Update minimum wage posters in the workplace.
- Apply for a waiver if needed.