California’s Minimum wage increase for Health Care Workers is delayed
As previously reported, California’s health care facilities will soon be required by law to increase the minimum wage they pay to their health care workers. This could range from $18 an hour to $23 an hour, depending on the type. The increased health care wage was originally scheduled to take effect on June 1, 2020. However, Governor Newsom signed SB828 on May 31, 2024 which delayed the implementation by one month, to July 1, 2020. The increased health-care minimum wage will now be implemented on October 15, 2024. This is contingent upon the state bringing in more revenue than the Newsom Administration expected when the 2024 Budget Act was enacted. If the state fails to meet that benchmark, wage increases will be implemented on January 1, 2020 or 15 days after notification by the Department of Health Care Services to the Legislature that they have begun the data retrieval required to implement an increase in hospital quality assurance fees for the program period starting January 1, 2020 (the “notification” date). The California Division of Labor Standards Enforcement recently released FAQs, which provide further information, including which health care employers and employees may be affected by the health care minimum wage increase.
Pursuant to AB 159, each wage increase will occur as follows:
Health care facilities that employ 10,000 or more full-time employees: Covered health care employees must be paid at least $23/hour beginning on October 15, 2024, or the sooner of January 1, 2025 or 15 days after the notification date (depending on what transpires with revenue and funding as noted above). The minimum wage will then increase by $1/hour each year on July 1, eventually reaching $25/hour in July 2026. Starting January 1, 2028, the minimum wage will increase annually (on January 1) at the lesser of 3.5% or the Consumer Price Index.
- Hospitals with a high or elevated governmental payor mix, and rural independent health care facilities: Beginning on October 15, 2024, or the sooner of January 1, 2025 or 15 days after the notification date (again, depending on what occurs with revenue and funding), covered health care employees must be paid at least $18/hour. The minimum wage will increase by 3.5% each year on July 1, reaching $25/hour in 2033. Starting January 1, 2035, the minimum wage will increase annually (on January 1) at the lesser of 3.5% or the Consumer Price Index.
- Clinics: Beginning on October 15, 2024, or the sooner of January 1, 2025 or 15 days after the notification date (depending on what occurs with revenue and funding), and continuing to June 30, 2026, covered health care employees must be paid at least $21/hour. These employees must be paid a minimum of $22/hour between July 1, 2026, and June 30, 2027. Starting July 1, 2027 these employees will be paid at least $22/hour. From January 1, 2029 onwards, the minimum wage will rise annually (on January 1) by the lesser of 3.5%, or the Consumer Price Index. These employees must be paid a minimum of $23/hour between July 1, 2026 and the end of June 30 2028. Starting July 1, 2028 these employees will be paid at least $23/hour. Starting January 1, 2030, the minimum wage will increase annually (on January 1) at the lesser of 3.5% or the Consumer Price Index.
- Takeaways
- While there is a delay in the effective date of the increased health care minimum wage until at least October 15, 2024, this should not deter health care employers from analyzing now whether they are appropriately classifying themselves and their workers to determine which category of minimum wage increase will apply to them. Health care employers are encouraged to review the FAQs, and consult their legal counsel in order to be prepared for the changes that will occur over the next few months.
