SB 525 Creates Minimum Wage Requirement for Healthcare Workers in California

Healthcare workers play a crucial role in safeguarding and nurturing the health of individuals and communities. The importance of healthcare workers spans far beyond the walls of healthcare facilities, impacting every aspect of life. Healthcare workers play a vital role in shaping healthier, flourishing communities and a better world. Unfortunately, there have been long-standing concerns about fair compensation and support for healthcare workers. In a move to address these concerns, California Governor Gavin Newsom signed into law Senate Bill (SB) 525 that will establish a new minimum wage requirement for healthcare workers. SB 525 aims to ensure healthcare workers receive equitable compensation comparable to the demands and significance of their work. Senate Bill 525 was signed in October 2023 and will become effective on June 1, 2024.

The following are the key components of Senate Bill 525:

Coverage

Senate Bill 525’s reach is quite vast. This new law covers almost all healthcare facilities operating in California, including psychiatric hospitals, medical hospitals, home health agencies, skilled nursing facilities, correctional facilities that provide healthcare services, rural health clinics, urgent care clinics, special hospitals, and, in some instances, a patient’s home.

When it comes to employees, Senate Bill 525 does not apply to doctors, nurses, caregivers, interns, medical residents, and fellows only. This law applies to employees of healthcare facilities who provide patient care and healthcare services and those who provide services that support healthcare provision, including guards, janitors, food service workers, housekeepers, clerical workers, and technical and ancillary service workers.

The new law also applies to independent contractors. However, two requirements must be met for an independent contractor to be covered under SB 525. First, there must be a contract to provide covered services. Second, the employer must exercise some level of control over the contractor’s hours, wages, or employment conditions.

However, Senate Bill 525 does not apply to outside salespersons, waste collection workers, workers whose main job is not health care, and workers providing medical transport services.

Changes to Minimum Wage

Senate Bill 525 aims to ensure that the minimum wage of healthcare workers reaches $25 per hour by June 1, 2028. The healthcare minimum wage will gradually increase annually. The first increase is expected to happen on June 1, 2024. The rate at which the minimum wage will be implemented depends on the type and size of the employer. For big health systems, the minimum wage starting June next year will be $23/hour, $24/hour from 2025, and $25/hour from 2026. For other facilities, the healthcare minimum wage is set to increase to $18/hour in June 2024 and, for others, to $21.

Exempt Salary Threshold

SB 525 imposes strict limitations on an employer’s ability to maintain an employee’s exempt status from minimum wage and overtime. For an employee to continue being considered exempt, they must receive a monthly salary of no less than 150% of the healthcare minimum wage or 200% of the state minimum wage for all workers, whichever amount is higher.

Contact a California Employment Lawyer

Contact a California employment lawyer if you need more information on SB 525.