Californians who work in hospitals and other medical settings, including receptionists, cleaners and security guards, could see a significant raise after the state Legislature approved a $25 hourly minimum wage requirement Thursday night.
The fate of the bill is now in the hands of Gov. Gavin Newsom, and comes after a hard-fought deal between unions calling for more support for employees deemed essential workers in the pandemic and industry administrators concerned about costs as financially struggling health facilities brace for closure.
Last-minute amendments to the bill — including a provision that blocks cities and counties from hiking wages locally for the next decade — reflect concessions made to employers in an attempt to get it past the finish line.
Even union-friendly Democrats were initially reluctant to approve the worker-focused bill, worried that rural community hospitals already facing bankruptcy would collapse under mass wage increases or pass costs on to patients.
Under the bill, workers at large healthcare facilities would earn $23 per hour starting next year, $24 per hour in 2025 and $25 in 2026. That applies to all staff, including nursing assistants, medical coders, launderers and hospital gift shop workers.
On Thursday, in the final hours of California’s Legislative session, the bill, SB 525, was approved by lawmakers after months of negotiations with unions and lobbyists representing nurses, hospitals and dialysis clinics.
“When I first introduced this bill on this floor, there was a lot of conversation, there were a lot of issues raised and concerns raised, and I took those to heart,” state Sen. Maria Elena Durazo (D-Los Angeles), who wrote the bill, said on the Senate floor Thursday.
The bill would establish the first minimum wage specifically for healthcare workers in the nation. But it’s still unclear if the Democratic governor will sign it into law.
The governor has warned of vetoes to come because of cost concerns as the state faces a $31.5-billion deficit.
An earlier legislative analysis of the proposal estimated that it would cost California $973.7 million annually to pay for raises at state-owned facilities, plus a “definitely significant” undetermined amount to bring non-healthcare workers’ wages up due to parity requirements at University of California facilities.
Costs of the bill in its current form are still being calculated but are expected to be lower because of significant amendments.
Republicans voted against the bill Thursday even after its many changes, saying they worried that rural hospitals and clinics will struggle with wage hikes, and that, in turn, Californians will see more expensive medical bills.
“We keep increasing the cost of living, so we have this mind-set that we’ll just increase the minimum, and we’ll just keep pushing it up and up and up,” Assemblyman Devon Mathis (R-Visalia) said on the Assembly floor. “But somebody has to pay for that increase.”
The bill had originally aimed to increase wages for all eligible health workers next year — impacting an estimated 469,000 people — but amendments added this week slowed the implementation and staggered raises depending on where employees work.
Employees of independent rural hospitals and places that serve high rates of Medicare and Medi-Cal patients will only see minimum pay of $18 per hour next year, and won’t see $25 per hour until 2033. Other smaller facilities, including urgent care clinics and skilled nursing facilities, would be required to pay their employees $21 per hour next year, reaching $25 per hour in 2028.
The bill now allows for some facilities to apply for temporary waivers if they can prove financial distress.
In addition to a moratorium on local health wage ordinances until 2034, SB 525 would also block attempts to cap hospital executive pay, such as the measure Los Angeles voters had expected to vote on next year.
If the bill is signed into law, that measure — along with any new city ordinances aiming to hike healthcare worker pay — would appear to be void.
Cities including Los Angeles and Long Beach, under pressure by Service Employees International Union (SEIU), had approved $25 per hour minimum wages for local healthcare workers. But those initiatives are on hold after a coalition of hospitals and other industries gathered enough signatures to put the question to local voters, seeking to repeal them over concerns that universal wage hikes would force facilities to scale back programs, ultimately diminishing patient care.
The California Hospital Assn., which has opposed the local ordinances, changed its position on SB 525 this week to one of support after the latest amendments.
Carmela Coyle, president and CEO of the association, called the final version of the bill a “landmark agreement” that strikes a balance between “significantly improving wages while protecting jobs and safeguarding care at community hospitals throughout the state.”
Coyle said wages should be set by the state instead of by way of local initiatives in order to create “greater equity for all of California’s health care workforce.”
The California Dialysis Council also withdrew its opposition after a behind-the-scenes deal was made with health worker union leaders to hold off — at least until 2026 — on costly recurring ballot measures regarding the operation of kidney dialysis clinics. California voters have repeatedly rejected a statewide mandate to increase staffing at the centers, a constant fight between health worker unions and dialysis companies.
“This agreement protects patients from the ongoing threats at the ballot and in the legislature while also providing additional wage increases for many health care workers,” Jaycob Bytel, spokesperson for the California Dialysis Council, said in a statement.
Nearly half of the workers expected to see a wage increase under the bill are Latino, and 75% are women, according to a report by the UC Berkeley Labor Center.
Supporters say that understaffed hospitals are a danger to patient care, and that raises are necessary to stem the state’s health worker shortage, as medical facilities are losing workers to retail, food and hospitality industries because they pay some staffers more and the jobs can be less stressful.
Tia Orr, executive director of SEIU California, called the statewide minimum wage plan “a historic breakthrough.”
“Everyone in the healthcare sector understands that we have a workforce crisis, and that wages are the essential prerequisite for any solution,” Orr said.