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Last Friday, Gov. Gavin Newsom signed into law SB 525, which sets minimum wages for health care workers across the state.
That action capped off a negotiation process authorized by the CHA board that ultimately led to a compromise legislative agreement on minimum wage. The agreement substantially mitigates the impact of the original proposed legislation ($21 in 2024 and $25 in 2025 statewide) and of nearly a dozen local ballot initiatives in Los Angeles, San Diego, and other jurisdictions that would not only increase the wage, but also reach into hospital operations to prevent cost-saving measures such as layoffs. Concurrent initiatives also would have limited compensation for hospital leaders in perpetuity.
As is the case in any negotiation, both sides yielded from their starting positions. At a high level, the new law creates a tiered step-up plan, preempts local ballot initiatives on wages and executive compensation caps, and limits the contract workers to whom the wage applies. Specifically, the law:
- Preempts city and county minimum wage ballot initiatives for 10 years, blunting efforts to use this approach to raise wages statewide. This includes those that are in process (cities where activity is underway); the initiative already enacted in the city of Inglewood will remain in place. The agreement also preempts local executive compensation cap ballot initiatives for six years.
- Creates three more moderate pathways to a $25 minimum wage, as follows:
- For the 12 largest hospital systems in the state — those with more than 10,000 full-time equivalent workers:
- $23 in June 2024
- $24 in June 2025
- $25 in June 2026
- Minimum wage after 2026 would be indexed to the lower of inflation or 3.5%
- For California’s most vulnerable communities, served by: 1) the 31 hospitals in the state that are not part of a health system and are rural; 2) the 39 hospitals in the state that are not part of a health system and have a government payer mix of 75% or more; and 3) the seven hospitals in the state that are part of a health system where both the hospital and the health system have a government payer mix of 90% or more:
- $18 in June 2024
- Minimum wage after 2024 would be increased by 3.5% annually until it reaches $25 in June 2033; it would be indexed thereafter to the lower of inflation or 3.5%
- For all other hospitals in the state:
- $21 in June 2024
- $21 in June 2025
- $23 in June 2026
- $23 in June 2027
- $25 in June 2028
- Minimum wage after 2028 would be indexed to the lower of inflation or 3.5%
- For the 12 largest hospital systems in the state — those with more than 10,000 full-time equivalent workers:
- Significantly limits the contract workers to whom a minimum wage applies:
- Contractors for whom the hospital has “joint employment” liability — those contractors for whom the hospital determines their wages, hours, and working conditions
- Contractors who work “primarily” (i.e., 51% of their time) on hospital premises
CHA is now working in each of the cities where initiatives have been filed to remove them from next year’s ballots. We will keep you posted on the status of those efforts in the coming weeks.
