California Raises Minimum Wage for Healthcare Workers

The biggest news in wage and hour laws this year was probably California’s increase in the minimum wage for fast food workers, which went into effect on April 1 this year. That change increased the minimum wage for fast food workers in the Golden State to $20 per hour, well above the current $16 minimum wage for other employees (see No Fooling: New Minimum Wage for Fast Food Employees in California Effective April 1, 2024). But only two weeks after the fast food bill was signed into law, Governor Newsom signed another piece of legislation into law affecting another significant segment of the state’s workforce with a minimum wage that far outpaces the raise given to workers in the fast food industry. Learn more below about the new minimum wage for healthcare workers in California effective June 1, 2024. For help navigating wage and hour issues like overtime, minimum wage, and classification of exempt employees in the Bay Area, contact Richard Koss for advice and representation from an experienced and dedicated San Francisco employment law attorney.

New Law Phases in Raises for Healthcare Workers Statewide

Senate Bill 525 was signed into law in October 2023, with the first set of raises slated to go into effect on June 1. As originally introduced, SB 525 proposed a raise in the minimum wage for all healthcare workers to $25 across the board. By the time the law was passed, however, the raise was changed to a gradual phase-in, with different schedules created for different classifications of employees. In a nutshell, the law created five phase-in schedules as follows:

1. Workers in healthcare systems with 10,000 or more full-time equivalent employees, dialysis clinics, and Los Angeles County-owned or operated facilities will see a minimum wage increase to $23 hourly starting June 1 of this year. The minimum wage will continue to go up, increasing to $24 an hour on June 1, 2025, and then to $25 per hour on June 1, 2026.

2. Hospitals with a high governmental payor mix, independent hospitals with an elevated governmental payor mix, and rural independent hospitals and covered rural healthcare facilities will see a smaller wage increase. For workers at these facilities, the minimum wage will increase to $18 an hour through 2033 and then jump to $25 thereafter. Hospitals that primarily serve Medicare and Medi-Cal patients, and facilities in counties with a population of fewer than 250,000 people, are the primary targets of this provision,

3. Workers at specified clinics will start to receive $21 in June of 2024, increasing to $22 in 2026 and $25 an hour beginning June 1, 2027.

4. Employees at all other hospitals and healthcare facilities will get a new minimum wage of $21 per hour next month, climbing to $23 an hour in 2027 before reaching $25 per hour thereafter.

5. Workers at skilled licensed nursing facilities will start getting at least $21 an hour in 2024, going to $23 an hour in 2026, and achieving $25 per hour in 2028. This part of the law is said to be effective only when a patient care minimum spending requirement is in effect.

For salaried workers classified as exempt from overtime (the professional, executive, and administrative “white-collar” exemptions in labor law), the new law requires that the salary basis be at least 150% of the applicable healthcare worker minimum wage or 200% of the applicable minimum wage in order to qualify for the exemption.

SB525 also includes a waiver program, allowing facilities to request either a temporary pause in increases or an alternative phase-in schedule, whenever the applicant can “demonstrate that compliance with the minimum wage requirements would raise doubts about the covered health care facility’s ability to continue as a going concern under generally accepted accounting principles.”

Will the Raise Go Into Effect?

Governor Newsom signed the law in October, but in January he asked the legislature to add a trigger mechanism so that the scheduled increases would only go into effect each year based on the availability of general revenue funds. As of this writing, only a couple of weeks before the first raise is scheduled to go into effect, the Governor is still looking for a way to delay implementation due to the serious budget shortfall the state is currently experiencing. Talks are ongoing between the governor’s office and the legislature, and the minimum wage for employees in large health systems and dialysis clinics, who would be the first to see raises under SB 525, are presently up in the air, although the increase will go into effect if no action is taken.

Meanwhile, voters in November will get the chance to create a new $18 minimum wage for all other workers in the state.

Help With Minimum Wage Violations and Employment Discrimination in San Francisco

If you are a healthcare employee or employer in the Bay Area facing legal issues related to California minimum wage or maximum hour laws, or if you have been discriminated against or retaliated against at work for exercising your legal rights, contact employment law attorney Richard Koss for help. Call 650-722-7046 on the San Francisco Peninsula or 925-757-1700 in the East Bay.