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New Minimum Wage Law (SB 525) Sets Higher Wages For Certain Health Care Employees
What is Senate Bill 525?
Senate Bill 525 (SB 525) is a new California law that raises the minimum wage for covered health care employees. SB 525 went into effect on January 1, 2024. It periodically raises the minimum wage over a number of years using four separate wage increase schedules based on the type of health care facility. SB 525 is codified at California Labor Code Section 1182.14.
Who and What is Covered by SB 525?
SB 525 applies to entities that employ “covered health care employees” that work in “covered health care facilities.” Expansive lists of “covered health care employees” and “covered health care facilities” are set forth in the statute and warrant careful review with counsel should you operate a nonprofit that provides health care services or health care related services. For example, SB 525 broadly defines the term “covered health care facilities,” which includes, but is not limited to (a) licensed special, acute care, or psychiatric care hospitals as defined in Section 1250 of the Health and Safety Code; (b) certain clinics, including community clinics and rural health clinics; (c) mental health rehabilitation centers as defined in Section 5675 of the Welfare and Institutions Code; and (d) physician groups, among other entities.
“Covered health care employees” are employees who work for a health care facility employer to provide patient care, health care services, or services supporting the provision of health care. This statutory definition is very broad and includes employees as diverse as physicians, patient care technicians, interns, food service staff, billing personnel, and laundry workers. “Covered health care employees” can also include contracted or subcontracted employees where a covered employer exercises control over the employee’s wages, hours, or working conditions.
The New Minimum Wage Schedules
Under SB 525, the minimum wage for covered health care employees at covered health care facilities in the private sector, which includes nonprofits, will increase on June 1, 2024 to $25 per hour over a period of between two to nine years, depending on the wage schedule applicable to the covered health care facility. Once the SB 525 minimum wage reaches $25 per hour, it will then be adjusted on an annual basis using a formula equivalent to the state minimum wage increase formula.
How Does SB 525 Affect Salaried Employees?
SB 525 states that for a covered health care employee to qualify as exempt from minimum wage and overtime law, they must earn a monthly salary of at least 150% of the health care worker minimum wage or 200% of the applicable minimum wage, whichever is greater.
How Does SB 525 Affect Overtime and Other Wage and Hour Laws?
The applicable minimum wages in SB 525 constitute the state minimum wage for covered health care employment for all purposes under the Labor Code and Wage Orders of the Industrial Welfare Commission.
The SB 525 requirements can be waived. The Department of Industrial Relations must develop a waiver by March 1, 2024. The waiver will allow a covered health care facility to apply for a temporary pause or alternative phase-in schedule of the minimum wage requirements. Waivers can be renewed, but the entity must apply to renew a waiver at least 180 days before it expires.
Moratorium on Local Wage Regulation
SB 525 contains a 10-year moratorium on local ordinances, regulations, or administrative actions that would impose wage or compensation requirements for covered health care facility employees, subject to limited exceptions. The moratorium began on September 6, 2023 and expires January 1, 2034. Consult with legal counsel to evaluate whether this provision applies to counties and charter cities.