An amended version of SB 525 was passed in the California Legislature on September 14, 2023, [1] which would raise minimum wages for health care workers across the state, starting June 1, 2024.  SB 525 is now awaiting signature or veto from California Governor Gavin Newsom, who has until October 14, 2023 to sign or veto this bill.

CHANGES IN MINIMUM WAGES:

SB 525 sets forth different tiers of minimum wage increases that vary based on the following:

• Large health systems and dialysis clinics:[2]
  • Minimum wage for covered health care employees shall be:
    • From June 1, 2024, to May 31, 2025, inclusive, $23 per hour
    • From June 1, 2025, to May 31, 2026, inclusive, $24 per hour
    • From June 1, 2026, and until adjusted below, $25 per hour
• Hospitals with high populations of Medicare/Medicaid patients, rural health care facilities, and health care facilities owned, affiliated or operated by a county with a population of less than 250,000 as of January 1, 2023:
  • Minimum wage for covered health care employees shall be:
    • From June 1, 2024, to May 31, 2033, inclusive, $18 per hour, with 3.5% increases annually
    • From June 1, 2033, and until adjusted as required by this bill, $25 per hour
• Free clinics not conducted or maintained by a government entity, community clinics, associated intermittent clinics, rural health clinics and urgent care clinics:
  • Minimum wage for covered health care employees shall be:
    • From June 1, 2024, to May 31, 2026, inclusive, $21 per hour
    • From June 1, 2026, to May 31, 2027, inclusive, $22 per hour
    • From June 1, 2027, and until adjusted as required by this bill, $25 per hour
• Licensed skilled nursing facilities when a patient care minimum spending requirement is in effect:
  • Minimum wage for covered health care employees shall be:
    • From June 1, 2024, to May 31, 2026, inclusive, $21 per hour
    • From June 1, 2026, to May 31, 2028, inclusive, $23 per hour
    • From June 1, 2028, and until adjusted below, $25 per hour.
• Other covered health care facilities:
  • Minimum wage for covered health care employees shall be:
    • From June 1, 2024, to May 31, 2026, inclusive, $21 per hour.
    • From June 1, 2026, to May 31, 2028, inclusive, $23 per hour
    • From June 1, 2028, and until adjusted as required by this bill, $25 per hour

Following these minimum wage increases, the Director of Finance shall calculate an adjusted minimum wage on or before August 1 of the following year. The calculation will increase the minimum wage by 3.5% or the rate of change in the averages for the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers, whichever is lower.

COVERED FACILITIES:

This bill affects the following “Covered Health Care Facilities,” including but not limited to:

• Facilities or work sites that are part of an integrated health care delivery system
• Acute care hospitals
• Acute psychiatric hospitals
• Special hospitals
• Licensed skilled nursing facilities if owned, operated or controlled by a hospital or integrated health care delivery system or health care system
• Licensed home health agencies
• Licensed specialty clinics, such as surgical clinics, rehabilitation clinics or chronic dialysis clinics, alternative birth centers that are not part of a hospital
• Licensed psychology clinics
• Outpatient clinics of hospitals
• Clinics of an institution of learning that teach a recognized healing art
• Physician group practice offices who provide services to members of a group practice prepayment health care service plan
• Licensed residential care facilities for the elderly if affiliated with acute care provider or owned, operated or controlled by an acute care hospital, acute psychiatric hospital or parent entity of such hospitals
• Psychiatric health facilities
• Mental health rehabilitation centers
• Community clinics
• Rural health clinics
• Urgent care clinics
• Ambulatory surgical centers certified to participate in Medicare
• Physician groups
• County correctional facilities that provide health care services
• County mental health facilities

COVERED EMPLOYEES:

This bill affects the following covered employees:

• Employees at health care facilities who provide patient care, healthcare services or services supporting the provision of health care
• This includes: nurse; physician; caregiver; medical resident, intern, or fellow; patient care technician; janitor; housekeeping staff person; groundskeeper; guard; clerical worker; nonmanagerial administrative worker; food services worker; gift shop worker; technical and ancillary services worker; medical coding and medical billing personnel; scheduler; call center and warehouse worker; and laundry worker
• This also includes an employee of a contractor or subcontractor who contracts with the health care facility employer or contractor to the health care facility employer to provide health care services or services supporting the provision of health care and the health care facility employer directly or indirectly exercises control over the employee’s wages, hours or working conditions
• This does not affect:
  • Outside sales people
  • Work performed in the public sector where the primary duties are not health care services
  • Delivery or waste collection work if that worker is not an employee of any person who owns, controls, or operates the health care facility
  • Medical transportation services if that worker is not an employee of any person who owns, controls, or operates the health care facility

Notably, this bill preempts local ordinances setting wages for health care workers.

[1] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB525

[2] Health care facilities with 10,000 or more fulltime employees or any covered health care facility that is part of an integrated health care delivery system or health care system with 10,000 or more full time employees, dialysis clinics, or a health facility owned, affiliated or operated by a county with a population of more than five million people as of January 1, 2023