Employment Law Bulletin | November 13, 2023

New Minimum Wage Schedules Apply to Certain Health Care Workers Starting June 1, 2024 (SB 525)

While the California base minimum wage increases to $16/hour effective January 1, 2024, a new law effective June 1, 2024, establishes five separate minimum wage schedules for “covered health care employees,” depending on the nature of their employer.  The schedules vary according to the type of employer and the base minimum wage increases over time starting June 1, 2024, until it reaches $25/hour.  The new law also requires an increase in the minimum salary an exempt health care worker must be paid to be classified as exempt (not eligible for overtime).

Covered Employers
“Covered health care facilities” which must comply with the new law are listed below.  Each facility type listed below is defined in SB525.

• facilities or other work sites that are part of an integrated health care delivery system;
• licensed general acute care hospitals;
• licensed acute psychiatric hospitals;
• special hospitals;
• licensed skilled nursing facilities, if owned, operated, or controlled by a hospital or integrated health care delivery system or health care system;
• patients’ homes when health care services are delivered by an entity owned or operated by a general acute care hospital or acute psychiatric hospital;
• licensed home health agencies;
• clinics, including a specialty care clinic, dialysis clinic, psychology clinic, outpatient clinic, clinic operated or affiliated with any institution teaching a recognized healing art, and/or non-profit clinic that conducts medical research and health education and provides health care to its patients through a group of 40 or more physicians and surgeons, who are independent contractors representing not less than 10 board-certified specialties, and not less than two-thirds of whom practice on a full-time basis at the clinic;
• licensed residential care facilities for the elderly, if affiliated with an acute care provider or owned, operated, or controlled by a general acute care hospital, acute psychiatric hospital, or the parent entity of a general acute care hospital or acute psychiatric hospital;
• psychiatric health facilities;
• mental health rehabilitation centers;
• community clinics, intermittent clinics, or publicly operated clinics;
• rural health clinics;
• urgent care clinics;
• ambulatory surgical centers;
• physician groups;
• county correctional facilities that provide health care services; and
• county mental health facilities.

Covered Employees
“Covered health care employees” include the following employees of a “covered health care facility” who provide patient care, health care services and services supporting the provision of health care:

• nurses;
• physicians, medical residents, interns and fellows;
• caregivers;
• patient care technicians;
• janitors, housekeeping and laundry staff;
• groundskeepers;
• guards;
• business office and clerical workers;
• non-managerial administrative workers;
• food service workers;
• gift shop workers;
• technical and ancillary service workers;
• medical coding and billing personnel;
• schedulers and call center workers; and
• warehouse workers.

Minimum Wage Schedules
The first minimum wage increase occurs on June 1, 2024, with scheduled increases to occur over subsequent years until it reaches $25/hour.  The minimum wage amounts and frequency of increases vary according to the type of covered health care facility.  The wage schedules are shown below.

Increase to Minimum Salary for Exempt Health Care Workers
The new law also increases the minimum salary for exempt (not eligible for overtime) health care workers.  Beginning June 1, 2024, in order to qualify as exempt, covered health care employees who are paid on a salary basis must earn a salary equivalent to at least 150% of the health care worker minimum wage (see wage schedules below) or 200% of the California minimum wage for a full-time employee ($133,120/year), whichever is greater.  Full-time employment is considered 2,080 hours per year and the minimum salary may not be pro-rated for part-time employment.  The exempt health care worker minimum wage is in contrast to the minimum salary for exempt employees in other industries which must be at least twice California’s $16/hour minimum wage for a full-time employee – $66,560 for 2024.

Wage Schedules

Waiver Program to be Developed
The law requires the California Division of Labor Standards Enforcement and the Department of Health Services to develop a waiver program by March 1, 2024, to allow covered health facilities to apply for and receive a temporary pause or an alternative phase-in schedule of the minimum wage requirements.

Please reach out to an SMT employment attorney if you have questions or need assistance interpreting this new law.

Lisa Ann Hilario

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Spaulding McCullough & Tansil LLP
Employment Law Group

Lisa Ann Hilario | Kari Brown