The New Minimum Wage for California Health Care Workers Takes Effect

Governor Gavin Newsom approved Senate Bill (SB) 525 in October 2023, and the bill was slated to take effect in June 2024. However, the implementation of SB 525, which introduces a new minimum wage for healthcare workers, was paused due to concerns about its impact on California’s budget. This happened after the Governor signed SB 159. Under this law, the implementation of the minimum wage increase was paused until specific state revenue increases were observed or the California Department of Health Care Services (DHCS) confirmed it was prepared to retrieve the necessary data. At the beginning of October this year, the DHCS gave the Legislature the notice, allowing SB 525 to go into effect 15 days later, on October 16. The following are some crucial information employees need to know about SB 525.

Who Is Affected by the New Minimum Wage?

Only those who work in a covered health care facility and provide health care services or support those who do are covered under SB 525. A wide range of healthcare facilities are covered under the new law, including;

• Licensed hospitals (general and psychiatric)
• Skilled nursing facilities owned or operated by hospitals or healthcare systems
• Licensed home health agencies
• Urgent care clinics
• Most outpatient clinics
• County mental health facilities

SB 525 does not only cover healthcare workers but also those individuals working for covered facilities in, among others, the following occupations;

• Nursing
• Caregiving
• Business office clerical work
• Technical and ancillary services and other services aimed at supporting patients
• Call center and warehouse work

Minimum Wage Phases

It is crucial to note that the new minimum wage increase won’t happen all at once, and it will vary across different employees. Below is a look at the phases;

Phase 1

• Large healthcare employers or integrated health system (IHS) with at least 10,000 full time employees (FTE); Dialysis clinics: $23.00/hour from October 16 – June 30, 2025
• Safety net hospitals: $18.00/hour from October 16 – June 30, 2025
• Clinics: $21.00/hour from October – June 30, 2026
• Others: $21.00/hour from October – June 30, 2026

Phase 2

• Large healthcare employers or IHS with at least 10,000 FTE; Dialysis clinics: $24.00/hour July 1, 2025 – June 30, 2026
• Safety net hospitals: Annual wage increase of 3.5% from July 1, 2025 to June 30, 2033
• Clinics: $22.00/hour from July 1, 2026 – June 30, 2027
• Others: $23.00/hour from July 1, 2026 – June 30, 2028

Phase 3

• Large healthcare employers or IHS with at least 10,000 FTE; Dialysis clinics: $25.00/hour July 1, 2026 – December 31, 2027
• Safety net hospitals: $25.00/hour from July 1, 2033 – December 31, 2034
• Clinics: $25.00/hour from July 1, 2027 – December 31, 2028
• Others: $25.00/hour from July 1, 2028 – December 31, 2029

Phase 4

• Large healthcare employers or IHS with at least 10,000 FTE; Dialysis clinics: From January 1, 2028, the minimum wage will be updated every year to account for inflation.
• Safety net hospitals: From January 1, 2035, the minimum wage will be updated every year to account for inflation.
• Clinics: From January 1, 2029, the minimum wage will be updated every year to account for inflation.
• Others: From January 1, 2030, the minimum wage will be updated every year to account for inflation.

Salaried workers will also be impacted, with employers required to pay at least 150% of the healthcare minimum wage or 200% of the regular minimum wage, whichever is higher.

Contact a California Employment Lawyer

Contact a California employment lawyer if you have questions or need help with an employment law-related matter.