New Minimum Wage for California Health Care Workers Takes Effect October 16, 2024

Topics: Personnel Policies and Procedures, Wage & Hour Issues

A minimum wage increase for health care workers in California will kick in on October 16, 2024. The change was originally slated to take effect this past June, after California enacted Senate Bill (“SB”) 525 in the fall of 2023. Over the summer Senate Bill 159 delayed the implementation of the increase due to concerns over the impact on the California budget. Under SB 159 the implementation of the minimum wage increases was delayed until either (1) certain increases to state revenues took place; or (2) the California Department of Health Care Services (DHCS) notified the Legislature that it had initiated the data retrieval necessary to implement an increase to hospital quality assurance fee revenues. 

The DHCS submitted that notice to the Legislature on October 1, 2024, thus triggering the health care minimum wage increases for 15 days later, on October 16, 2024. 

The new minimum wage is required for those who (1) work for a covered “health care facility” and (2) provide health care services or support the provision of health care.  

Covered health care facilities include: 

• Facilities or other work sites that are part of an integrated health care delivery system;
• Licensed general acute care hospitals;
• Licensed acute psychiatric hospitals and psychiatric health facilities;
• Mental health rehabilitation centers;
• Licensed skilled nursing facilities, if owned, operated, or controlled by a hospital or integrated health care delivery system or health care system;
• Patients’ homes when health care services are delivered by an entity owned or operated by a general acute care hospital or acute psychiatric hospital;
• Licensed residential care facilities for the elderly, if affiliated with an acute care provider or owned, operated, or controlled by a general acute care hospital, acute psychiatric hospital, or the parent entity of a general acute care hospital or acute psychiatric hospital;
• Licensed home health agencies;
• Physicians groups;
• Most outpatient clinics; 
• Community clinics, intermittent clinics, or certain publicly operated clinics (except as exempted);
• Rural health clinics;
• Urgent care clinics;
• Ambulatory surgical centers;
• County correctional facilities that provide health care services; and
• County mental health facilities.

Of note, the new minimum wage does not only impact healthcare workers, but also those employees working for a covered facility. This includes employees in the following occupations: 

• nursing; 
• caregiving; 
• services provided by medical residents, interns, or fellows; 
• services supporting patient care, including technical and ancillary services;
• janitorial work, housekeeping, laundry, food services, groundskeeping and guard duties; 
• business office clerical work; 
• scheduling, medical coding and billing; 
• call center and warehouse work; and
• gift shop work

The amount of the minimum wage increase varies across different employers, and will increase in phases, with the first phase starting on October 16, 2024. The following chart outlines the applicable rates by employer type for each phase.

The minimum wage increase will also affect salaried workers, as covered employers must 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 otherwise applicable minimum wage, whichever is greater. 

Covered employers may qualify for a waiver in the form of a one-year temporary pause or alternative phase in the schedule of the minimum wage requirements if they can demonstrate that compliance with the minimum wage requirements would detrimentally affect the operations of their business. To do so, they must submit an application with supporting documentation on the Department of Industrial Relations website. 

Covered employers must also post a notice to employees of the change in the minimum wage (the Labor Commissioner’s Office notice is available here).

If you are a covered healthcare employer, you must act immediately to provide proper notice to covered employees, revise pertinent policies, and work with payroll providers to ensure compliance. SB 525 is a complex piece of legislation that has left many organizations wondering whether their employees are subject to the newly mandated minimum wage and, if so, which specific minimum wage applies to them. This is particularly challenging given the short turnaround time for compliance by October 16, 2024.    

CDF’s health care industry employment defense practice is here to help through this process. Contact Candace DesBaillets, Dawn Irizarry, Carolina Schwalbach, or your favorite CDF attorney, if you have questions about the health care minimum wage increases or changes made by SB 525.