In 2023, Governor Newsom signed Senate Bill 525, which established five separate minimum wage schedules for certain covered health care facilities, effective June 1, 2024. However, due to a projected state budget deficit, Governor Newsom recently signed SB 828, delaying the effective date to July 1, 2024. Although SB 828 provides some reprieve for health care industry employers, it only is a brief delay, and the remainder of SB 525 remains unaffected.

SB 525: Increased Health Care Industry Minimum Wage

SB 525 establishes a schedule to gradually increase the minimum wage for workers in the health care industry. The first minimum wage increase will be to $23 per hour for most larger facilities, $21 per hour for most smaller facilities, and $18 per hour for facilities with a large percentage of Medicare and Medicaid patients, rural independent hospitals, and small county facilities. After the initial increase, the scheduled rate of increase varies based on the size of the facility and employer type, and may continue to adjust beyond the statutory schedule, based on the Consumer Price Index.

The minimum wage increase covers “health care workers,” a term broadly defined to include not only direct patient care roles, but also janitors, housekeeping staff, groundskeepers, clerical workers, food service workers, gift shop workers, medical billing personnel, schedulers, call center workers, warehouse workers, and laundry workers.

The increase also applies to employees of contractors if either (a) a contracted employee performs work providing health care services, or services supporting the provision of health care, primarily on the premises, or (b) the contractor provides health care services, or services supporting the provision of health care, and the health care facility employer exercises control over the employee’s wages, hours or working conditions.

SB 828: Delayed Implementation

The health care industry minimum wage increases will now become effective on July 1, 2024, and will gradually increase on a schedule that more aligns with a fiscal year. The remaining increases will go into effect on June 30 of the designated year, instead of May 31.

Read SB 828 here.

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It may be tempting to breathe a sigh of relief when seeing headlines about the “delayed minimum wage increase” – but that delay is only a month. We think additional delays are unlikely because SB 828’s delay was the result of substantial negotiations and reflects a compromise in the Legislature.