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  • Corey Hall

How SB 525 Affects Healthcare Employers

The healthcare sector stands on the precipice of significant change with the enactment of Senate Bill No. 525 (SB 525), a landmark legislation aimed at restructuring the minimum wage landscape for healthcare workers in California. Approved on October 13, 2023, and filed with the Secretary of State the same day, SB 525 introduces a comprehensive framework establishing varying minimum wage schedules for healthcare employees based on the type and size of the healthcare facility.


SB 525 Healthcare Facility

Understanding SB 525: The Basics


At its core, SB 525 seeks to address the urgent and growing need for a stable and well-compensated healthcare workforce, which is vital for providing high-quality care to California's residents. The bill establishes five separate minimum wage schedules for covered healthcare employees, categorizing employers primarily based on the number of full-time equivalent employees (FTEEs) and the nature of the healthcare facility.


Key provisions of SB 525


Large Healthcare Employers


For facilities with 10,000 or more FTEEs, the minimum wage for healthcare workers will rise incrementally from $23 per hour in 2024 to $25 per hour by 2026.

Hospitals with High Governmental Payor Mix and Independent Rural Facilities

A specialized schedule sets the minimum wage at $18 per hour from 2024, reaching $25 per hour by 2033.


Clinics and Other Specific Facilities


These establishments will see minimum wages increase from $21 per hour in 2024 to $25 per hour by 2027.


General Schedule for Other Covered Employers


A catch-all category that will implement a gradual increase from $21 per hour in 2024 to $25 per hour by 2028. Moreover, SB 525 intricately defines "covered healthcare employees," encompassing a wide range of roles from direct patient care providers to support staff, broadening its impact.


Waiver Program


A waiver program will be developed to allow healthcare facilities to apply for a temporary pause or alternative phasing of the minimum wage requirements under certain financial hardship conditions.


Salaried (Exempt) Employees


For salaried healthcare workers, SB 525 sets a threshold of earning at least 150% to 200% of the applicable minimum wage for full-time employment to be exempt from minimum wage and overtime laws.


Who is a Covered Healthcare Employee?


A "covered healthcare employee" encompasses individuals contracted or subcontracted under the condition that their employer has an agreement with a healthcare facility or its contractors to deliver healthcare services or support services related to healthcare. This definition applies if the healthcare facility has direct or indirect control over the employee's wages, hours, or working conditions, possibly through an intermediary. Moreover, it includes explicitly those employees whose contracted or subcontracted work is mainly conducted on the premises of a healthcare facility to provide healthcare services or services that support healthcare provision.


Who isn’t a Covered Healthcare Employee?


The term "covered health care employee" excludes individuals in certain roles and contexts. This exclusion applies to those employed as outside salespersons and individuals in the public sector where health care services are not their primary responsibilities. Additionally, workers engaged in delivery or waste collection activities within the premises of a covered healthcare facility are not considered covered healthcare employees, provided they are not employed by the entity owning, controlling, or operating the facility. Similarly, those providing medical transportation services to or from a covered healthcare facility are excluded because they are not employees of the entity owning, controlling, or operating the facility.


The Implications for Employers


SB 525's staggered implementation means that healthcare employers must be acutely aware of their classification under the bill to ensure they meet the progressive minimum wage requirements. The legislation not only aims to elevate the earnings of healthcare workers but also introduces mechanisms for enforcement and compliance, including the provision for workers to seek civil action for violations.

Additionally, the bill allows certain facilities to apply for a temporary pause or alternative phase-in schedule if compliance threatens their operational viability. This nuanced approach underscores the bill's intent to balance worker welfare with the economic realities of healthcare provision.


Get Support on Handling SB 525


If you're looking for a more detailed analysis of specific sections of the bill or have questions about how particular provisions might affect your organization, please get in touch with our firm. We are equipped to provide comprehensive guidance on SB 525, from in-depth legal analysis to strategic planning and compliance support.


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