California Introduces Health Care Worker Minimum Wage Supplement Under SB 525

What Changed

California has implemented Senate Bill 525 (SB 525), which establishes a separate, higher minimum wage for covered health care employees working at covered health care facilities. The law requires a new Minimum Wage Order Supplement for Health Care Employees to be posted alongside existing Industrial Welfare Commission (IWC) Order No. 4 (Professional, Technical, Clerical, Mechanical, and Similar Occupations) or IWC Order No. 5 (Public Housekeeping Industry), depending on the employer's industry classification.

The new minimum wage rates for covered health care employees are:

$21.00 per hour from October 16, 2024 through June 30, 2026
$22.00 per hour from July 1, 2026 through June 30, 2027 (for certain facilities) or $23.00 per hour from July 1, 2026 through June 30, 2028 (for other covered facilities)
$25.00 per hour at full implementation (timeline varies by facility type, ranging from July 1, 2027 to July 1, 2028)

Once the minimum wage reaches $25.00 per hour, it will be adjusted annually using the same inflation formula as the state general minimum wage.

Who Is Affected

This law applies to covered health care facility employers and their covered health care employees. Covered facilities include hospitals, clinics, skilled nursing facilities, dialysis clinics, psychiatric facilities, and other health care settings as defined under Labor Code section 1182.14.

Covered employees include workers who provide patient care, health care services, or support services at these facilities. The definition is broad and includes clinical and non-clinical staff.

Notably, county-operated health care facilities have a delayed compliance date of January 1, 2025, rather than October 16, 2024.

Employers outside the health care industry are not affected by this supplement. The general California minimum wage (currently $16.00 per hour) remains unchanged by this law.

Where It Applies

California statewide. This applies to all covered health care facilities operating within the state, including facilities operated by private employers, public entities, and county governments (with the delayed effective date noted above).

When It Takes Effect

The initial minimum wage of $21.00 per hour took effect October 16, 2024. The wage increases are phased over several years, with the full $25.00 per hour rate arriving between 2027 and 2028 depending on facility type.

County covered health care facilities must comply by January 1, 2025.

The posting supplement should be displayed immediately alongside the applicable IWC wage order.

Why It Matters

SB 525 represents one of the most significant sector-specific minimum wage laws in the country. At $25.00 per hour at full implementation, California's health care worker minimum wage will be substantially above the state's general minimum wage and the highest sector-specific floor in the nation.

For health care employers, this creates a multi-year obligation to plan for and implement phased wage increases. Non-compliance carries the same penalties as any California minimum wage violation: back pay, liquidated damages, and potential Labor Commissioner enforcement actions.

The law also creates a new posting requirement. Failure to display the IWC supplement is a separate compliance violation from underpayment of wages.

The Humareso Take

This is a major development for any of our clients in the health care space. The phased approach gives employers time to plan, but the first increase is already in effect. The tricky part is determining which wage schedule applies to your specific facility type, because not all covered employers follow the same timeline to $25.00. If you operate a health care facility in California, we strongly recommend working through the classification details now rather than discovering a mismatch during a wage audit. Reach out to your Humareso team so we can help you map the right schedule to your operations.

Recommended Action Steps

Determine your facility classification under SB 525 to identify which wage schedule and timeline applies to your organization.
Adjust pay rates immediately for all covered health care employees to at least $21.00 per hour if not already at or above that level.
Post the new IWC Minimum Wage Order Supplement for Health Care Employees alongside your existing IWC Order No. 4 or IWC Order No. 5 at all California work locations.
Update payroll systems to reflect the current rate and build in the phased increases on the applicable future effective dates.
Review employee classifications to ensure all workers who meet the definition of "covered health care employee" are identified and compensated correctly.
Contact your Humareso representative for assistance with facility classification, wage schedule mapping, and a compliance review tailored to your health care operations.