California's SB 525 introduces a major wage increase for healthcare workers, starting October 16, 2024, after a series of legislative approvals and delays. This increase applies to various healthcare facilities, with wages rising to $25 per hour by 2028, depending on the type of facility.
For more information on California healthcare minimum wage increase and its potential impact on your organization, contact our Managing Partner, Richard Liu, at richard.liu@consultils.com.
Background on SB 525
Governor Gavin Newsom signed SB 525 into law to boost compensation for healthcare workers across California. The law applies to both hourly and salaried employees in nearly all healthcare facilities. Initially planned for June 2024, the wage hike was delayed due to budgetary concerns but is now confirmed for October 16, 2024.
Impact on Hourly and Salaried Workers
Hourly Workers: Starting wages for healthcare workers will range from $18 to $23 per hour depending on the facility type. This phased increase will eventually bring all covered healthcare workers to $25 per hour over a period of years, with adjustments for inflation beginning in 2028.
Salaried Workers: To qualify as an exempt employee, the worker’s salary must be at least 150% of the healthcare minimum wage or 200% of the state minimum wage, whichever is greater.'
Four Stages of Wage Increases
Phase | Healthcare Employer/Integrated Health System with 10,000+ Full-time Employee; Dialysis Clinics | Safety Net Hospitals | Clinics | Others |
1 | $23.00 per hour (Oct 16, 2024 - Jun 30, 2025) | $18.00 per hour (Oct 16, 2024 - Jun 30, 2025) | $21.00 per hour (Oct 16, 2024 - Jun 30, 2026) | $21.00 per hour (Oct 16, 2024 - Jun 30, 2026) |
2 | $24.00 per hour (Jul 1, 2025 - Jun 30, 2026) | 3.5% annual wage increase (Jul 1, 2025 - Jun 30, 2033) | $22.00 per hour (Jul 1, 2026 - Jun 30, 2027) | $23.00 per hour (Jul 1, 2026 - Jun 30, 2028) |
3 | $25.00 per hour (Jul 1, 2026 - Dec 31, 2027) | $25.00 per hour (Jul 1, 2033 - Dec 31, 2034) | $25.00 per hour (Jul 1, 2027 - Dec 31, 2028) | $25.00 per hour (Jul 1, 2028 - Dec 31, 2029) |
4 | Starting Jan 1, 2028, adjusted for inflation annually | Starting Jan 1, 2035, adjusted for inflation annually | Starting Jan 1, 2029, adjusted for inflation annually | Starting Jan 1, 2030, adjusted for inflation annually |
Waiver for Employers
Employers may apply for a one-year waiver or an alternative phase-in schedule if complying with the wage hike will significantly impact business operations. To qualify, employers must submit an application with supporting documentation to the Department of Industrial Relations.
Action Steps for Employers
Consult Legal Counsel: Determine if SB 525 applies to your business and ensure proper classification of workers.
Update Wage Policies: Revise policies to include higher minimum wage rates, accounting for increased meal, rest period, and overtime premiums.
Provide Required Notices: Post notices in visible areas and inform employees of the new wage schedule. Facilities receiving waivers must notify employees within 10 days.
While this wage increase brings a significant payroll cost, employers must also prepare for indirect costs such as higher benefit premiums, increased reporting time pay, and potential wage disputes. It’s important to remain proactive to avoid noncompliance and legal actions.
Conclusion
California’s healthcare minimum wage law represents a transformative shift in the industry. Employers must act swiftly to ensure compliance and avoid penalties. Consulting legal counsel and revising wage practices are critical steps in meeting these new requirements. For more information on how SB 525 impacts your organization, contact our team at ILS for expert guidance and support in staying compliant with California’s wage and hour laws.
For more information on California healthcare minimum wage increase and its potential impact on your organization, contact our Managing Partner, Richard Liu, at richard.liu@consultils.com.
Richard Liu, Esq. is the Managing Counsel of ILS. He serves clients as a management-side defense lawyer specializing in employment and business litigation. Richard is also an expert on litigation prevention and compliance. He regularly advises Fortune 500 companies and startups on employment, labor, and commercial matters.
Email: richard.liu@consultils.com | Phone: 626-344-8949
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