Long-Delayed CA Healthcare Minimum Wage Increase Arriving October 16, 2024

On October 16, 2024, many healthcare workers in California will begin receiving minimum wage increases, starting between $18 and $23 per hour, depending on their facility type.

This increase will apply to “nonexempt covered healthcare employees” working at or contracted by “covered healthcare facilities.” Read on for an overview of the bill and the history of its postponement.

Bill Delay Recap

If you feel like you’ve read a similar article several times this year, you probably have.

SB 525, California’s original bill outlining minimum wage increases for healthcare workers, was signed in 2023. The first of five wage increases outlined in the bill was planned for June this year, before being postponed to July with SB 828, then postponed again under AB 159.

In the most recent delay under AB 159, three potential effective dates for the bill were established, each with unique potential triggers:

1. 1. Date: January 1, 2025, at the latest. Trigger Event: The bill would go into effect on this date unless the following dates were triggered beforehand.
   2. Date: TBD. 15 days after trigger event Trigger Event: State Department of Health Care Services notifies the Joint Legislative Budget Committee that it has undertaken data retrieval necessary for Medi-Cal increases

1. Date: October 15, 2024 Trigger Event: If the state’s income from July 1 to September 30, 2024, is at least 3% higher than originally budgeted for the same time period;

The winner was option number two from above. When the California Department of Health Care Services (DHCS) notified the Joint Legislative Budget Committee that data retrieval required for Medi-Cal increases began on October 1, it triggered a 15-day countdown for the CA healthcare minimum wage increase to take effect. This notice lands the latest effective date of the healthcare wage increase on October 16, 2024 (unless a later date is specified).

The notice reads:

Thus, pursuant to subdivision (b) of Section 1182.16, the healthcare minimum wage increases shall be effective 15 days after the date of this notification, on October 16, 2024, unless a later effective date is specified pursuant to Sections 1182.14 and 1182.15.

The Wage Increase Schedule Explained

The bill’s schedule is a little daunting for readers. To simplify, five separate wage increase schedules are planned to increase CA healthcare minimum wages differently depending on facility types. The starting rates range between $18 and $23 per hour and have varying timelines to bring all applicable CA healthcare minimum wages to $25. The most extended plan aims to reach $25 per hour by 2033.

The five different schedules for facility types are reiterated in AB 159 as follows:

1. “Existing law requires, for any covered healthcare facility employer, as defined, with 10,000 or more full-time equivalent employees (FTEE), as defined, any covered healthcare facility employer that is a part of an integrated healthcare delivery system or a healthcare system with 10,000 or more FTEEs, a covered healthcare facility employer that is a dialysis clinic or is a person that owns, controls, or operates a dialysis clinic, or a covered health facility owned, affiliated, or operated by a county with a population of more than 5,000,000 as of January 1, 2023, the minimum wage for covered healthcare employees to be $23 per hour from July 1, 2024, to June 30, 2025, inclusive, $24 per hour from July 1, 2025, to June 30, 2026, inclusive, and $25 per hour from July 1, 2026, and until as adjusted, as specified.
2. Existing law requires, for any hospital that is a hospital with a high governmental payor mix, an independent hospital with an elevated governmental payor mix, a rural independent covered healthcare facility, or a covered healthcare facility that is owned, affiliated, or operated by a county with a population of less than 250,000 as of January 1, 2023, as those terms are defined, the minimum wage for covered healthcare employees to be $18 per hour from July 1, 2024, to June 30, 2033, inclusive, and $25 per hour from July 1, 2033, and until as adjusted, as specified.
3. Existing law requires, for specified clinics that meet certain requirements, the minimum wage for covered healthcare employees to be $21 per hour from July 1, 2024, to June 30, 2026, inclusive, and $22 per hour from July 1, 2026, to June 30, 2027, inclusive, and $25 from July 1, 2027, and until as adjusted, as specified.
4. Existing law requires, for all other covered healthcare facility employers, the minimum wage for covered healthcare employees to be $21 per hour from July 1, 2024, to June 30, 2026, inclusive, $23 per hour from July 1, 2026, to June 30, 2028, inclusive, and $25 per hour from July 1, 2028, and until as adjusted, as specified.
5. Existing law also separately requires, for a licensed skilled nursing facility, as described, in specified circumstances the minimum wage for certain other covered healthcare employees, as described, to be $21 per hour from July 1, 2024, to June 30, 2026, inclusive, $23 per hour from July 1, 2026, to June 30, 2028, inclusive, and $25 per hour from July 1, 2028, and until as adjusted, as specified.”

What Workers Will Get Wage Increases?

A “nonexempt covered healthcare employee” doesn’t just mean doctors and nurses, but rather any employee at a healthcare facility that performs services supporting the provision of healthcare. That includes (but is not limited to) physicians, nurses, caregivers, groundskeepers, janitors, and laundry workers.

A covered healthcare employee is virtually any employee working for a covered healthcare facility or those contracted by one.

More specifically employees must meet both of the following conditions to receive the increased minimum wage:

“(i) The employee’s employer contracts with the healthcare facility employer, or with a contractor or subcontractor to the healthcare facility employer, to provide healthcare services, or services supporting the provision of healthcare.

(ii) The healthcare facility employer directly or indirectly, or through an agent or any other person, exercises control over the employee’s wages, hours or working conditions. However, “covered healthcare employee” includes all employees performing contracted or subcontracted work primarily on the premises of a healthcare facility to provide healthcare services or services supporting the provision of healthcare.”

What Facilities Will Get Wage Increases?

The statute only applies to “covered healthcare facilities”. Here are the 20 facility types listed as covered healthcare facilities in SB 525 and the subsequent AB 159:

“(i) A facility or other work site that is part of an integrated healthcare delivery system.

(ii) A licensed general acute care hospital, as defined in subdivision (a) of Section 1250 of the Health and Safety Code, including a distinct part of any such hospital.

(iii) A licensed acute psychiatric hospital, as defined in subdivision (b) of Section 1250 of the Health and Safety Code, including a distinct part of any such hospital.

(iv) A special hospital, as defined in subdivision (f) of Section 1250 of the Health and Safety Code.

(v) A licensed skilled nursing facility, as defined in subdivision (c) of Section 1250 of the Health and Safety Code, if owned, operated, or controlled by a hospital or integrated healthcare delivery system or healthcare system.

(vi) A patient’s home when healthcare services are delivered by an entity owned or operated by a general acute care hospital or acute psychiatric hospital.

(vii) A licensed home health agency, as defined in subdivision (a) of Section 1727 of the Health and Safety Code.

(viii) A clinic, as defined in subdivision (b) of Section 1204 of the Health and Safety Code, including a specialty care clinic, or a dialysis clinic.

(ix) A psychology clinic, as defined in Section 1204.1 of the Health and Safety Code.

(x) A clinic as defined in subdivision (d), (g), or (l) of Section 1206 of the Health and Safety Code.

(xi) A licensed residential care facility for the elderly, as defined in Section 1569.2 of the Health and Safety Code, 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.

(xii) A psychiatric health facility, as defined in Section 1250.2 of the Health and Safety Code.

(xiii) A mental health rehabilitation center, as defined in Section 5675 of the Welfare and Institutions Code.

(xiv) A community clinic licensed under subdivision (a) of Section 1204 of the Health and Safety Code, an intermittent clinic exempt from licensure under subdivision (h) of Section 1206 of the Health and Safety Code, or a clinic operated by the state or any of its political subdivisions, including, but not limited to, the University of California or a city or county that is exempt from licensure under subdivision (b) of Section 1206 of the Health and Safety Code.

(xv) A rural health clinic, as defined in paragraph (1) of subdivision (l) of Section 1396d of Title 42 of the United States Code.

(xvi) An urgent care clinic.

(xvii) An ambulatory surgical center that is certified to participate in the Medicare Program under Title XVIII (42 U.S.C. Sec. 1395 et seq.) of the federal Social Security Act.

(xviii) A physician group.

(xix) A county correctional facility that provides healthcare services.

(xx) A county mental health facility.”

How Will This Increase Affect Salaried Healthcare Employees?

Salary requirements for healthcare workers are calculated based on the minimum hourly wage orders, so this wage increase naturally alters how salaried healthcare workers in CA are compensated.

Salary healthcare workers must earn at least 150 percent of the applicable healthcare worker minimum wage, or 200 percent of the California minimum wage, whichever is greater.

So, some salary healthcare workers will see an increase in wages if their income does not already equal the greater of the two conditions above. Other salaried healthcare workers will see no change in income if their wages already equal or surpass the greater of the above two conditions.

What’s Next?

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If you’re unsure if this wage increase will affect your facility and employees on October 16, seek legal counsel for professional advice.

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