Minimum Wage Hikes Continue, Impacting Squeezed Home-Based Care Providers 

A minimum wage increase for California health care workers took effect on Oct. 16. The increase was initially scheduled for June, but was postponed due to concerns about its potential impact on the California budget.

Under Senate Bill 159, the implementation of the minimum wage increases was delayed until either certain increases to state revenues took place or the California Department of Health Care Services (DHCS) notified the legislature that it had initiated the data retrieval necessary to implement an increase to hospital quality assurance fee revenues. The DHCS submitted that notice to the legislature on Oct. 1, triggering the health care minimum wage increase 15 days later.

The new minimum wage is required for those who work for a covered health care facility and provide health care services or support the provision of health care.

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“Several employers have asked for clarification regarding what it means to be a worker who provides ‘health care services’ or ‘services supporting the provision of health care,’” Carolina Schwalbach, partner and co-chair of CDF Labor Law LLP’s Healthcare Industry Employment Defense Practice Group, told Home Health Care News. “The Department of Industrial Relations has provided guidance confirming that the new law covers all workers who provide ‘patient care-related services including nursing; caregiving; services provided by medical residents, interns, or fellows; and services supporting patient care including 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.’”

Thus, home-based care providers across the state will be impacted.

The amount of the wage increase varies across different employers and will rise in phases. Health care employers or integrated health systems with 10,000 or more employees will reach $23 per hour from Oct. 16, 2024 to June 30, 2025 and will reach $25 per hour by Dec. 31, 2027. Clinics and other health care entities will begin with a wage of $21 per hour from Oct. 16, 2024 to June 30, 2026 and reach $25 per hour by Dec. 31, 2029.

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“Minimum wage increases in California typically follow a schedule – this often accounts for inflation based on the consumer price index and other factors,” Schwalbach said. “A schedule in phases also gives employers more time to plan and make decisions regarding what other operational changes may need to take place in order to be able to absorb the increased costs in labor.”

The minimum wage increase will also affect salaried workers, as covered employers must ensure that salaried employees earn a monthly salary equivalent to no less than 150% of the health care worker minimum wage or 200% of the otherwise applicable minimum wage.

“Employees who are properly classified as ‘exempt’ under California law can remain exempt,” Schwalbach noted. “However, exempt employees working for a health care employer must receive a salary of at least 1.5 times the new health care worker minimum wage or two times the state minimum wage, whichever is greater – and meet other specific requirements rendering the employee properly classified as an exempt employee for wage and hour purposes.”

Workers providing services for skilled nursing facilities not owned, operated or controlled by hospitals are not entitled to the health care worker minimum wage at this time. The increased minimum wage for these workers will go into effect only when there is a patient care minimum spending requirement applicable to skilled nursing facilities, according to the California Department of Industrial Relations website.

Covered employers may qualify for a one-year temporary pause or alternative phase in the schedule of minimum wage requirements if they can demonstrate that compliance with the new requirements would detrimentally affect their business operations. To do so, they must submit an application with supporting documentation to the Department of Industrial Relations.

“To obtain a waiver, a covered health care facility has to show that complying may impact its ability to continue to operate,” Schwalbach said. “To support such a request, the organization would need to provide documentation regarding the covered health care facility’s financial condition as well as the condition of any parent or affiliated entity, and evidence of the actual or potential direct financial impact of compliance. Employees then need to be notified of this waiver.”

Schwalbach noted that obtaining a waiver or pause may signal to employees that there is trouble on the horizon for the organization. With health care workers in high demand, some employees in those situations may seek alternative employment.

The minimum wage increase is another step California has taken to advance the position of home care workers. It follows the state’s position on non-solicitation agreements.

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