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California Gives Healthcare Workers A Raise

08 Nov


Update Applicable to:

All covered employers as defined in the bill that have healthcare workers in California

What happened?

On October 13, 2023, Governor Newsom signed Senate Bill (SB) 525, which enacts a multi-tiered statewide minimum wage schedule for healthcare workers employed by certain covered healthcare facilities. The new law established 5 different minimum wage schedules depending upon the nature of the employer.

What do employers need to do?

Employers should review the resources provided to determine if they fall into the covered category and what requirements they need to adhere to, as well as identify what employees and contractors will be subjected to the wage increase. Employers should consult a trusted employment attorney to review or create adequate policies to comply with the new law.

What are the details?

Senate Bill 525, which is set to take effect on January 1, 2024, establishes a comprehensive minimum wage schedule for covered health care employees and facilities, outlining schedules depending on how a facility is classified.  A hospital’s classification is determined by factors such as facility size, type, location, and governmental payor mix percentage and a covered healthcare employee encompasses a broad array of positions, from patient care roles like nurses and physicians to support positions such as janitors and clerical workers, and to contracted or subcontracted employees when the healthcare facility has control over their wages, hours, or working conditions.

The definition of a covered healthcare facility excludes certain types of facilities, such as those owned by the California Department of State Hospitals and tribal clinics exempt from licensure. It also excludes certain types of healthcare workers, such as outside salespersons and public sector employees not primarily involved in healthcare. Additionally, workers not directly employed by the healthcare facility are also excluded, like delivery or waste collection.

The law prioritizes facility classification for phased minimum wage schedules as follows:

  1. Large Employers and Integrated Health Systems
  2. Hospitals with a High Government Payer Mix, Rural Independent Facilities, or County Run Facilities in Low Population Counties
  3. Primary Care, Free, Community, and Rural Clinics
  4. Other Covered Health Care Facilities

For a limited time before January 1, 2025, employers can challenge the covered classification or its accuracy with the California Department of Health Care Access and Information. The Department of Industrial Relations will offer waivers to certain healthcare facilities via a program that must be developed no later than March 1, 2024.

The bill invalidates local laws related to wages and compensation for healthcare employees after September 6, 2023. It also provides a private right of action to enforce said wage requirements.

For a list of covered facilities: Link

For a list of covered workers: Link

For the phased minimum wage: Link

For more information, please see the links below:

Law firm Articles: Article 1, Article 2, Article 3

News: Article 1

Senate Bill (SB) 525

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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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