Governor Newsom recently signed SB 525, a law set to bring significant changes to the health care industry in California. The law, effective from June 1, 2024, introduces a higher minimum wage for a wide range of health care employees and grants them the right to enforce these wage requirements through legal action.

SB 525 casts a wide net, encompassing various health care employees and facilities with few exceptions. A “covered health care employee” is defined as anyone working in a facility providing patient care, health care services, or related support. This includes not only medical professionals like nurses and doctors but also support staff such as janitors, housekeepers, clerical workers, and even independent contractors if they have a contract with a health care facility and the facility controls their wages and working conditions.

The law applies to a broad range of health care facilities, including integrated health care delivery systems, hospitals, clinics (including rural health care clinics, specialty care clinics, certain licensed community clinics) and more. The minimum wage requirements will vary depending on the type of facility.

Starting from June 1, 2024, the minimum wage rates for health care employees will increase annually, with different schedules for various types of facilities. The rates are categorized into three stages with the first stage setting wages as follows:

The law also sets standards for salaried employees. Covered employers must ensure that salaried employees earn a least 150% of the health care worker minimum wage or 200% of the state minimum wage, whichever is higher.

Recognizing the financial impact on employers, SB 525 establishes a waiver program. Covered employers can apply for a one-year temporary pause or an alternative phase-in schedule for the minimum wage requirements if they can demonstrate that compliance would adversely affect their operations. The waiver program details will be provided by the Department of Industrial Relations by March 1, 2024.