On October 13, 2023, Governor Gavin Newsom signed California Senate Bill 525 (CA SB 525), setting a new minimum wage standard for healthcare workers starting June 1, 2024. This wage increase addresses economic disparities within the healthcare sector and improves workers’ living standards. Wage increases will be phased in over the next several years and vary depending on various factors. Smaller and rural hospitals will have less substantial increases in the immediate term than larger metropolitan institutions.
Who is Affected?
The legislation broadly impacts employees across various roles in the healthcare industry.. It includes those involved in direct patient care and supportive roles, such as certified nursing assistants, technicians, patient aides, and contract workers. The expansive inclusion is designed to mitigate California’s ongoing shortage of healthcare workers.
Exclusions Under the New Law
However, not all workers fall under the scope of CA SB 525. The law excludes outside salespeople, public sector employees who do not perform healthcare services, and personnel such as delivery or waste collectors not employed by healthcare facilities.
Impact on Healthcare Employers
The new law brings significant changes, especially in salary structuring. Nearly all healthcare employers in California will need to adapt to these new wage standards, except those explicitly exempt, such as hospitals controlled by the California Department of State Hospitals and specific tribal clinics.
Health Care Employers Covered Under SB 525
Integrated Health Care Delivery Systems and Hospitals
Integrated healthcare delivery systems and hospitals with more than 10,000 full-time employees must raise their minimum wage from $23 per hour in June 2024 to $25 per hour by 2026. Following 2026, annual wage increases will be adjusted for inflation but capped at 3.5%.
These wage increases are required for licensed psychiatric hospitals, dialysis clinics, entities in counties with populations over five million, and various other health-related facilities such as urgent care and ambulatory surgical centers. Additionally, physician groups and county correctional facilities providing healthcare must comply with the new wage standards.
Rural or Independent Hospitals, Clinics, and County-Run Facilities
In contrast, rural and independent hospitals and clinics in smaller counties with populations under 250,000 will experience a more gradual wage increase starting at $18 per hour in 2024, with a 3.5% annual increment until they reach the $25 per hour threshold by 2033.
SNFs, Home Health Care Services, and Others
Meanwhile, other healthcare facilities, including SNFs, home health services, and those not categorized previously, will see minimum wages rise from $21 per hour in 2024 to $25 per hour by June 1, 2028.
Health Care Minimum Wage Key Dates
| EMPLOYER TYPE | PHASE 1 – 2024 | PHASE 2 – 2025/2026 | PHASE 3 – 2026/2033/2028 |
| It has more than 10,000 full-time employees | $23 per hour*$71,760 annually | $24 per hour*$74,880 annually | $25 per hour*$78,000 annually |
| Rural, independently operated, high governmental payor mix | $18 per hour*$66,643 annually | 3.5% increase per year (2025-2032) | $25 per hour*$78,000 annually |
| Other healthcare facilities or licensed SNFs owned, operated, or controlled by a hospital or integrated. | $21 per hour*$65,520 annually | $23 per hour*$68,640 annually | $25 per hour*$78,000 annually |
*Threshold for employees exempt from the new minimum wage law.
Implementation and Compliance
The California Department of Health Care Access and Information will be crucial in implementing this law. Starting in January 2024, they will publish a list of all covered employers.
If you Believe Your Organization was Incorrectly Classified
The California Department of Health Care Access will handle any appeals or applications for waivers from those who believe they listed in error.
In Conclusion
The enactment of California Senate Bill 525 (CA SB 525) marks a transformative step towards economic equity in the healthcare sector, with approximately 426,000 workers set to benefit from substantial wage increases (https://laborcenter.berkeley.edu/ca-health-care-minimum-wage-new-estimates-feb2024/). As healthcare employers across the state recalibrate their salary structures to align with these new standards, the California Department of Health Care Access and Information will ensure compliance. Overall, CA SB 525 represents a significant investment in California’s healthcare workers, acknowledging their critical role in the state’s well-being and setting a precedent for compensation in essential industries.
If you have any questions regarding how SB 525 will impact your organization, please give us a call at 1.800.447.8233 or visit our contact form: https://www.allevity.com/contact/
