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SB 525
THIRD READING
Bill No: SB 525
Author: Durazo (D), et al.
Amended: 5/25/23
Vote: 21
SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-1, 4/12/23 AYES: Cortese, Durazo, Laird, Smallwood-Cuevas
NOES: Wilk
SENATE APPROPRIATIONS COMMITTEE: 4-2, 5/18/23
AYES: Portantino, Bradford, Wahab, Wiener
NOES: Jones, Seyarto
NO VOTE RECORDED: Ashby
SUBJECT: Minimum wage: health care workers
SOURCE: SEIU California
DIGEST: This bill enacts a $25 minimum wage for health care workers employed by covered healthcare facilities, as defined, to be increased annually by calculating an adjusted minimum wage using the U.S. Bureau of Labor Statistics nonseasonally adjusted U.S. Consumer Price Index, as specified.
Senate Floor Amendments of 5/25/23 (1) provide a two year phased in implementation on the healthcare worker minimum wage increase; (2) specify that the annual minimum wage increases shall be the lesser of 3.5% or the rate of change in the CPI; and (3) reduce from two times to 150 percent the minimum wage, the salary needed to meet the exemption requirements as a salary employee.
ANALYSIS:
Existing law:
1) Sets California’s minimum wage at $15.50 an hour for all employers and specifies that after January 1, 2023, the minimum wage rate will be adjusted SB 525
annually for inflation based on the national consumer price index for urban wage earners and clerical workers (CPI-W). (Labor Code §1182.12)
2) Defines a full workday as 8 hours, and 40 hours as a workweek and requires overtime to be paid at the rate of no less than one and one-half times an employee’s regular rate of pay for work performed beyond 8 hours in a day or 40 hours in a week. Furthermore, work performed beyond 12 hours in a day is to be compensated at twice the regular rate of pay. (Labor Code §510)
3) Authorizes an exemption from the requirement to pay overtime, as specified, for executive, administrative and professional employees if the employee is primarily engaged in the duties that meet the test of exemption, customarily and regularly exercises discretion and independent judgment in performing those duties, and earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment. (Labor Code §515)
4) Empowers the Labor Commissioner’s office, within the Department of Industrial Relations, with ensuring a just day’s pay in every workplace in the State and promotes economic justice through robust enforcement of labor laws. (Labor Code §79-107)
This bill:
1) Makes several findings and declarations regarding workers in the health care industry including that higher wages are an important means of retaining an experienced workforce and attracting new workers and that the pandemic has worsened staff shortages and higher wages are needed to attract and retain health care workers to treat patients.
2) Increases the minimum wage for covered health care employment to not less than twenty-five dollars ($25) per hour for all hours worked in covered health care employment. This applies to any portion of any worker’s time spent working in covered health care employment. Specifies that the increase shall be implemented as follows:
a) On June 1, 2024 and until June 1, 2025, the minimum wage shall be not less than twenty-one dollars ($21) per hour.
b) On and after June 1, 2025, the minimum wage shall be not less than twenty- five dollars ($25) per hour.
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3) Provides that following the implementation of the $25 minimum wage increase, on or before August 1 of that year and annually thereafter, the Director of Finance shall calculate an adjusted minimum wage using the nonseasonally adjusted U.S. Consumer Price Index, as specified.
4) Provides that the health care worker minimum wage shall be enforceable by the Labor Commissioner or by a covered worker through a civil action, through the same means and relief available for violation of any other state minimum wage requirement.
5) Specifies that where compensation is on a salary basis, the employee shall earn a monthly salary equivalent to no less than 150 percent of the health care worker minimum wage in order to qualify as exempt from the payment of minimum wage and overtime, including where the employer is the state, a political subdivision of the state, the University of California, or a municipality.
6) Defines “covered health care employment” to mean any of the following:
a) All paid work performed on the premises of any covered health care facility, regardless of the identity of the employer.
b) All paid work providing health care services performed for any person that owns, controls, or operates a covered health care facility, location irrelevant.
7) Specifies that “covered health care employment” does not include:
a) Employment as an outside salesperson.
b) Any work performed in the public sector where the primary duties performed are not health care services.
c) Delivery work on the premises of a covered health care facility, provided that the delivery worker is not an employee of any person that owns, controls, or operates a covered health care facility.
8) Defines “covered health care facility” to mean any of the following:
a) A facility or work site that is part of an integrated health care delivery system, as defined.
b) A licensed general acute care hospital, as defined.
c) A licensed acute psychiatric hospital, as defined.
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d) A special hospital, as defined.
e) A licensed skilled nursing facility, as defined.
f) A public health jurisdiction, as defined.
g) A patient’s home when health care services are delivered by an entity owned or operated by a general acute care or psychiatric hospital. h) A licensed home health agency, as defined.
i) A clinic, as defined, including a primary care, specialty care, or dialysis. j) A psychology clinic, as defined.
k) A licensed residential care facility for the elderly, as defined, if affiliated with an acute care provider or owned, operated or controlled by a general acute care hospital, acute psychiatric hospital, or the parent entity of such. l) A psychiatric health facility, as defined.
m) A mental health rehabilitation center, as defined.
n) A community clinic, as defined, an intermittent clinic, as specified, a clinic operated by the state or any of its political subdivisions, including, but not limited to, the University of California or a city or county that is exempt from licensure, as specified, a tribal clinic, as specified, or an outpatient setting conducted, maintained, or operated by a federally recognized Indian tribe, tribal organization, or urban Indian organization, as defined. o) A rural health clinic, as defined in paragraph (1) of subdivision (l) of Section 1396d of Title 42 of the United States Code.
p) An urgent care clinic, as defined.
q) An ambulatory surgical center certified to participate in the Medicare program, as specified.
r) A physician group, as defined.
s) A county correctional facility that provides health care services. t) A county mental health facility.
9) Defines “employer” as a person who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person including the state, political subdivisions of the state, the University of California, and municipalities.
10) Defines “health care services” as patient care-related services including nursing; caregiving; services provided by medical residents, interns, or fellows; technical and ancillary services; janitorial work; housekeeping; groundskeeping; guard duties; business office clerical work; food services; laundry; medical coding and billing; call center and warehouse work; scheduling; and gift shop work; but only where such services directly or indirectly support patient care.
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11) Provides that the bill’s provisions are severable and if any provision or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
Background
California's current minimum wage is $15.50 per hour [which was enacted pursuant to SB 3 (Leno, Chapter 4, Statutes of 2016)]. Some cities in California have established minimum wages that are higher than the current statewide minimum wage. Since the start of 2022, spearheaded by SEIU-United Health Workers, several California cities have passed or introduced ordinances for a $25 an hour minimum wage for healthcare workers. Some of these ordinances, however, have been challenged and put on hold after petitions for referendum were submitted to instead put the matter before city voters. An initiative cleared for the November 2024 ballot, The Living Wage Act, would increase the state minimum wage to $18 an hour over several years.
[NOTE: Please see the Senate Labor, Public Employment and Retirement Committee analysis on this bill for more background information.] FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee:
The Department of Industrial Relations (DIR) would incur annual costs (materials, printing and postage) of about $864,000 (General Fund) to issue new Minimum Wage Orders to impacted employers statewide.
The State Controller’s Office (SCO) has yet to determine the fiscal impacts that would result from the bill. Because of the bill’s annual inflation adjustment, any identified state payroll costs would continue to rise relative to current law in the out-years, and would be driven by future inflation rates (General Fund).
The California Department of Human Resources (CalHR) indicates that the bill would result in increased personnel costs across multiple departments and job classifications. CalHr’s detailed costing has yet to be completed. However, based on preliminary information, the Department estimates that the bill would result in increased state employee payroll costs, minimally in the high hundreds of millions of dollars annually. Depending on how broadly the State defines the indirect support functions covered by the bill, annual personnel costs could SB 525
reach the billions of dollars. The majority of these costs would come from the General Fund.
The Medi-Cal program purchases health care for 14 million Californians. The bill would result in unknown Medi-Cal costs, to increase payments to health care providers, including hospitals and nursing homes. The magnitude is unknown, but minimally would be in the hundreds of millions of dollars annually (General Fund and other funds).
The bill would result in General Fund cost pressures to increase wages for state employees who at present earn slightly more than the current minimum wage to avoid salary compaction.
SUPPORT: (Verified 5/25/23)
SEIU California (source)
AFSCME Local 3299
Alameda County Democratic Party
Alameda Labor Council
American Medical Student Association
Antelope Valley African American Leadership Council
Ascend Learning
Asian Americans Advancing Justice-Southern California
Asian Democrats of Los Angeles County
Board of Behavioral Sciences
Buen Vecino
California Advocates for Nursing Home Reform
California Calls
California Commission on the Status of Women and Girls
California Environmental Voters
California Immigrant Policy Center
California Labor Federation, AFL-CIO
California League of United Latin American Citizens
California Pan - Ethnic Health Network
California Physicians Alliance
California Professional Firefighters
California Teamsters Public Affairs Council
Care Workers Council
Central Coast Labor Council
Central Labor Council of Contra Costa County
Central Labor Council, Fresno-Madera-Tulare-Kings Counties, AFL-CIO SB 525
City of Irvine, Mayor Khan
City of La Mesa
City of La Mesa Councilmember Jack Shu
City of La Mesa Councilmember Patricia N. Dillard
City of Lynwood
City of Modesto Councilmember Chris Ricci
City of Stockton Councilmember Kimberly Warmsley
Clergy and Laity United for Economic Justice
Community and Labor Center at UC Merced
Contra Costa Central Labor Council
Councilmember Monterey Park Henry Lo
Councilmember Lynwood Juan Munoz-Guevara
County of Monterey
Courage California
Democratic Woman’s Club of San Diego County
Dolores Huerta Foundation
East Bay Alliance for A Sustainable Economy
End Poverty in California
Engineers and Scientists of California, IFPTE Local 20, AFL-CIO Ensuring Opportunity Campaign to End Poverty in Contra Costa County Fresno Barrios Unidos
Fresno County Democratic Central Committee
Fund Her
Indivisible San Jose
Justin Cummings, Supervisor Third District, County of Santa Cruz Los Angeles Alliance for A New Economy
Latino and Latina Roundtable of The San Gabriel and Pomona Valley Latino Medical Student Association
Lawyers' Committee for Civil Rights of the San Francisco Bay Area Let's Green Ca!
Los Angeles County Young Democrats
LULAC California
Madera County Democratic Central Committee
Marin County Democratic Party
Mi Familia Vota
MILPA (Motivating Individual Leadership for Public Advancement) Monterey Bay Central Labor Council, AFL-CIO
Monterey County Office of Supervisor Luis A. Alejo
Monument Impact
SB 525
Napa County Democratic Party
Napa-Solano Labor Council, AFL-CIO
National Action Network Sacramento Chapter
National Association of Social Workers, California Chapter North Bay Labor Council
North Valley Labor Federation
Office of Mario Trujillo, Mayor Pro Tem Downey
Orange County Labor Federation, AFL-CIO
Organize Sacramento
Physicians for National Health Program – California
Restaurant Opportunity Center United
Sacramento City Councilmember Mai Vang
San Fernando Valley Young Democrats
San Francisco Democratic Party
San Joaquin Community Foundation
San Joaquin Pride Center
San Mateo County Central Labor Council
San Mateo County Democratic Party
Santa Ana City Council
Santa Clara County Democratic Party
SEIU - United Healthcare Workers
Silicon Valley Democratic Club
Silicon Valley Rising Action
SIREN: Services Immigrant Rights and Education Network
Solano County Democratic Central Committee
Sonoma County Democratic Party
South Bay Labor Council
Stanislaus County Democratic Central Committee
State Building and Construction Trades Council of California Steinberg Institute
Sunrise Silicon Valley
Supervisor Terra Lawson-Remer, County of San Diego Board of Supervisors TechEquity Collaborative
UAW Local 2865
UAW Local 5810
Ventura County Clergy and Laity United for Economic Justice Ventura County Democratic Central Committee
Western Center on Law & Poverty, Inc.
Working Partnerships USA
Individual Support Letters: 4
SB 525
OPPOSITION: (Verified 5/25/23)
Alliance of Catholic Health Care
AltaMed Health Services
Altura Centers for Health
America's Physician Groups
APLA Health & Wellness
Association of California Healthcare Districts
Association of Independent California Colleges and Universities Aveanna Healthcare
Axis Community Health
Barlow Respiratory Hospital
Barstow Community Hospital
Barton Health
Brea Chamber of Commerce
California Chapter of The American College of Cardiology California Chamber of Commerce
California Assisted Living Association
California Association of Health Facilities
California Association for Health Services At Home
California Business Properties Association
California Chapter American College of Cardiology
California Children's Hospital Association
California Dialysis Council
California Health+ Advocates, Subsidiary of the California Primary Care Assoc.
California Hospital Association
California Medical Association
California Medical Business Services, LLC
California Nurses Association/National Nurses United
California Orthopedic Association
California Podiatric Medical Association
California Radiological Society
California Retailers Association
California Rheumatology Alliance
California Senior Advocates League
California Society of Plastic Surgeons
California State Association of Counties
California State Sheriffs’ Association
California Taxpayers Association
Canyon Ridge Hospital
Carlsbad Chamber of Commerce
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Casa Colina Hospital and Centers for Healthcare
Catalina Island Medical Center
Central City Community Health Center
Children's Hospital of Orange County
Chino Valley Medical Center
Clinica Sierra Vista
Coalition of California Chambers – Orange County
Communicare Health Centers
Community Health System, Inc.
Community Clinic Association of Los Angeles County
Community Health Association of Inland Southern Region
Community Medical Centers, Inc.
Corona Chamber of Commerce
County of Ventura
District Hospital Leadership Forum
Enloe Medical Center
Eisenhower Health
Eisner Health
El Proyecto del Barrio, Inc.
Family Health Centers of San Diego
Fontana Chamber of Commerce
Foothill Regional Medical Center
Fresno American Indian Health Project
Gardner Family Health Network, Inc.
Gilroy Chamber of Commerce
Golden Valley Health Center
Greater Coachella Valley Chamber of Commerce
Greater High Desert Chamber of Commerce
Greater San Fernando Valley Chamber of Commerce
Grossmont Healthcare District
Health Alliance of Northern California
Health Center Partners of Southern California
Hill Country Community Clinic
Huntington Beach Chamber of Commerce
Huntington Health
Independent Physical Therapists of California
John Muir Health
Kaweah Delta Health Care District
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Kern County Board of Supervisors
Kern Medical
LA Cañada Flintridge Chamber of Commerce and Community Association La Clinica de la Raza, Inc.
LA Downtown Medical Center
Latinx Physicians of California
LeadingAge California
Lifelong Medical Care
Los Angeles County Business Federation
Mad River Community Hospital
Mammoth Hospital
Marshall Medical Center
Mayers Memorial Healthcare District
Mee Memorial Healthcare System
Mountain Communities Healthcare District
Murrieta Wildomar Chamber of Commerce
National Federation of Independent Business
Montclair Hospital Medical Center
Neighborhood Healthcare
North Coast Clinics Network
North East Medical Services
NorthBay Health
Northeast Valley Health Corporation
Oceanside Chamber of Commerce
Ole Health
Orange County Business Council
Orchard Hospital
Pacific Association of Building Service Contractors
Palo Verde Hospital
Palos Verdes Peninsula Chamber of Commerce
Paso Robles Chamber of Commerce
Pediatric Day Health Care Coalition
PIH Health
Plumas District Hospital
Pomona Valley Hospital Medical Center
Private Essential Access Community Hospitals
Ridgecrest Regional Hospital
Roseville Area Chamber of Commerce
Rural County Representatives of California
Salinas Valley Health
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San Bernardino Mountains Community Hospital District
San Diego Regional Chamber of Commerce
San Francisco Community Clinic Consortium
San Gorgonio Memorial Hospital
San Juan Capistrano Chamber of Commerce
San Ysidro Health
Santa Barbara South Coast Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Santee Chamber of Commerce
Scripps Health
Seneca Healthcare District
Shasta Community Health Center
Shasta Regional Medical Center
Sierra View Medical Center
Simi Valley Chamber of Commerce
Sonoma Valley Hospital
South County Chambers of Commerce
Southern California Hospital at Culver City
Southern California University of Health Sciences
Southwest California Legislative Council
Southwest Healthcare – Inland Valley and Rancho Springs Hospitals St. Jude Neighborhood Health Center
T.H.E. (To Help Everyone) Health and Wellness Center
Tahoe Forest Health System
Temecula Valley Hospital
Templeton Chamber of Commerce
Torrance Area Chamber of Commerce
TCC Family Health
Tri County Chamber Alliance
Tulare Chamber of Commerce
United Hospital Association
University of California Health
Urban Counties of California
Valley Children's Healthcare
Tulare County Board of Supervisors Fifth District
Tulare County Board of Supervisors First District
Valley Community Healthcare
Valley Industry and Commerce Association
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Via Care Community Health Center
Vista Chamber of Commerce
Westside Council of Chambers of Commerce
Westside Family Health Center
ARGUMENTS IN SUPPORT: SEIU California is sponsoring the measure arguing, among other things that “Care work has historically been undervalued by society. A recent report on the California nursing home workforce characteristics found that 1 out of every 2 Skilled Nursing Facility workers earns less than $20 per hour. These workers are also primarily women (81%) and workers of color (77%), with almost half of them identified as Hispanic.”
The California Labor Federation is also in support and argues that, “The toll of the pandemic has driven health care workers out of the field in greater numbers than those entering it.” They further write, “The exodus of experienced health care workers has turned a workforce shortage into a full-blown health care staffing and patient care crisis. Workforce shortages and instability result in longer wait times, decreased quality of care, and worsens existing health disparities as low-income communities of color bear the burden of staffing shortages.” Regarding the opposition by the California Nurses Association, the California Labor Federation states, “We support raising the minimum wage and also hope that the concerns raised by the California Nurses Association can be addressed as the bill moves forward to address the needs of all health care workers.” ARGUMENTS IN OPPOSITION: Opponents argue that, “In the aftermath of the COVID-19 pandemic, health care providers in California are in dire financial straits. One major hospital has already closed, others are on the brink, and more than half are losing money every day to care for patients.” They also argue that, “SB 525’s added costs will force health providers to cut hours, positions and services. With fewer positions and potentially fewer providers, health care professionals will have fewer opportunities, be at heightened risk of job loss, and have less flexibility in the positions that are available.”
The California Nurses Association is opposed unless amended to exempt RNs from the scope of the bill. They argue that, “the inclusion of RNs in this bill will ultimately lower the wage floor for RNs, encouraging employers to propose takeaways on wages during bargaining. California RNs are currently among the highest paid in the nation well above the proposed $25 minimum hourly wage for health care workers in SB 525. According to the U.S. Bureau of Labor Statistics, the median hourly wage for California RNs is $60.26, while RNs in the lower 10th SB 525
percentile make $37.53. In other words, one would be extremely hard pressed to identify anyone working as an RN in California who makes below $25/hour.”
Additional opposition comes from community health centers (CHCs) who argue, “because Community Health Centers primarily serve patients enrolled in publicly funded health coverage programs, CHCs are paid for the care they provide through a complex structure governed by state and federal law. Federally Qualified Health Centers (FQHCs) are paid a predetermined rate through PPS that encompasses reimbursement for a set of eligible services provided during a single visit.” In practice, CHCs argue, “PPS places CHCs on a ‘fixed income’ that is not easily modified to meet industry pressures or state-mandated wage increases. They also argue that the bill’s annual inflation increases, “would create cost pressures not supported by federal or state law.”
Prepared by: Alma Perez-Schwab / L., P.E. & R. / (916) 651-1556 5/30/23 9:34:19
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