While California SB 525 was originally passed over a year ago, after several delays, it is scheduled to finally go into effect on October 16, 2024. The bill will raise the minimum wage for many health care employees in the state. Additionally, home care companies are generally subject to the new law in two instances, one involving subcontracting and the other involving being part of a hospital system. 

More specifically, this means that if a franchisee contracts with the covered health care facility (or with a contractor or subcontractor to the covered health care facility) to provide health care services (which includes “caregiving”), or services supporting the provision of health care, then the minimum wage must increase as follows:

1. If the contracting party is a covered health care facility employer with 10,000 or more full-time equivalent employees, or is part of an integrated health care delivery system or health care system with 10,000 or more full-time equivalent employees [here is the list of those entities], or is a dialysis clinic, then the new minimum wage will be $23 per hour.
2. If the contracting party is a “safety net” hospital (here is a list of those), then the new minimum wage will be $18 per hour, with a 3.5% annual increase starting every July 1.
3. If the contracting party is a clinic described in Labor Code section 1182.14(c)(3)(A), or any other covered health care facility, the new minimum wage is $21 per hour.

As a part of this process, the California Department of Industrial Relations released FAQs to assist employers in complying with the scheduled increase.

In addition, licensed home health agencies are expressly identified as health care facility employers. The statute is not clear on whether all of the employees of an agency with a home health license would be considered “health care facility employees.” However, licensed agencies should consider the possibility of this designation, even for caregivers, under the new bill. We recommend that licensed agencies consult with employment counsel to help determine employee designations to ensure proper wages are being paid at all times.