New Law Raises Minimum Wage for California Health-Care Workers

Many of the lowest-paid workers in California’s health-care industry will get a raise next year under a new state law Gov. Gavin Newsom (D) signed Friday setting minimum-wage increases across the sector.

The measure (S.B. 525) will set the minimum wage at $23 an hour starting next year at large health systems and dialysis clinics. That rate will increase to $25 an hour by 2026 and is a significant increase from the statewide minimum wage, which will be $16 an hour in 2024. The law will also raise the minimum wage more slowly at other health-care facilities around the state.

The law is one of several major victories the labor movement notched during a legislative session that ended Sept. 14. The measure initially prompted opposition from a broad coalition of health-care providers concerned that it would significantly raise costs to the point of forcing cuts. Opponents then reached a last-minute deal with the California Service Employees International Union, which backed the bill, to reach a compromise.

The measure scraps initial language that would set a $25 hourly minimum wage starting next year for health-care workers across the state, from the largest hospitals to the smallest clinics and skilled nursing facilities, and instead phases in higher rates.

The union, which represents health-care workers, argued the higher minimum wage was warranted amid staffing shortages. After the agreement, SEIU touted it as still providing an increase in the minimum wage that will apply to every on-site worker in the sector, from X-ray technicians to groundskeepers at hospitals, skilled nursing facilities and physician groups. Backers contend that will amount to a raise for hundreds of thousands of Californians.

“Today California is putting a stop to the hemorrhaging of our care workforce by ensuring health-care workers can do the work they love and pay their bills,” said Tia Orr, executive director of SEIU California, in a statement.

The bill would set minimum wages for the health care industry that vary by facility.

Dialysis centers and larger employers, such as those with more than 10,000 full-time workers, would have to pay employees at least $23 an hour starting in June 2024—a rate that would increase annually to $24 an hour in 2025 and $25 an hour in 2026.

Some hospitals and rural health-care facilities will only have to raise the minimum wage for their employees to $18 an hour next year. The minimum wage at those facilities would increase 3.5% annually and would be set at $25 an hour in 2033, under the measure. At community clinics, the minimum wage would reach $25 an hour in 2027. And at other facilities covered by the measure, it would reach $25 an hour by 2028.

Some health-care facilities could also seek waivers if they could show the higher minimum wage would trigger doubts about their financial viability.

The bill signing comes the same day that several labor unions and Kaiser Permanente announced a tentative agreement that includes wage increases and a $25 hourly minimum wage for workers in California.

The SEIU and dialysis centers also reached a truce that could avoid an expensive ballot measure campaign next year.

In past years, SEIU has pushed several times to pass unsuccessful ballot measures regulating dialysis facilities. While the industry has prevailed in those campaigns, it has done so at enormous cost, spending tens of millions of dollars to defeat a 2022 initiative.

The California Dialysis Council said Sept. 18 that providers and the union have agreed not to file legislation or ballot measures involving one another for four years.