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New Minimum Wage Standard

California Senate Bill 525 introduced a new minimum wage standard for healthcare workers, which is set to impact most healthcare employees and facilities in California. This bill, signed by Governor Gavin Newsom, establishes a $25 per hour wage standard, representing up to a 30% increase from previous wages, effective from June 1, 2024. It sets a new salary threshold for exempt healthcare employees and affects a broad range of workers, including certified nursing assistants, technicians, patient aides, food service workers, housekeepers, medical coders and billers, schedulers, and laundry workers.

The bill outlines specific exemptions and alternative phase-in schedules for various categories of healthcare employers and facilities:

  1. Exempt Entities: Hospitals controlled by the California Department of State Hospitals, Tribal clinics exempt from licensure, and outpatient settings operated by Tribal organizations are exempt from these new minimum wage standards.

  2. Integrated Health Care Delivery Systems and Hospitals: Larger healthcare systems with over 10,000 employees will see a phased increase in minimum wage, starting at $23 per hour in 2024 and reaching $25 per hour by 2026.

  3. Rural or Independent Hospitals, Clinics, and County-Run Facilities: These facilities will start with a minimum wage of $18 per hour in 2024, increasing annually by 3.5% until it reaches $25 per hour in 2033.

  4. Other Health Care Facilities: This category includes facilities like licensed SNFs owned, operated, or controlled by a hospital or health care system. They will start at $24 per hour in 2024, eventually reaching $25 per hour by 2028.

  5. Waivers and Alternative Phase-in Schedules: Facilities can seek waivers or request alternative phase-in schedules if compliance poses a significant financial challenge, potentially leading to the closure of facilities or loss of jobs.

CMA Update: CMA and other healthcare advocacy organizations have sought to make sure legislators understand the potential harms that rushing into large minimum wage increases would have on patient access to care at a time when providers are already strained. Once the California Hospital Association and the California Primary Care Association indicated they would switch their approach from opposing the bill to working out a compromise, CMA engaged to limit the impact to members through exemptions and pushing for a “ramp up” to the final $25 wage. 

CMA was able to exempt medical groups with 24 physicians or less and Independent Practice Associations (IPAs).  Regarding the IPAs, the employees are exempt, but if a medical group with 25 physicians or more are part of an IPA, they are still subject to the bill.

How will this new law impact you, your practice or your group?  Let me know so I can share with our elected officials.

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