California health care workers could earn $25 minimum wage after union, hospitals make deal

Hundreds of thousands of health care workers in California are likely to secure a new minimum wage of $25 an hour as the Legislature successfully sent the bill Thursday night to Gov. Gavin Newsom’s desk.

One caveat, though, is workers would have to wait between three and 10 years to see the full wage.

Senate Bill 525, introduced by Los Angeles Democratic Sen. Maria Elena Durazo and backed by unions, would ensure a minimum wage of $25 for a wide variety of employees at covered health care facilities. The wage floor applies to direct patient care providers, such as nurses, physicians and medical residents, but also to workers in support positions, such as janitors, housekeepers, food service workers, medical billing personnel and gift shop clerks.

Until recently, the bill faced staunch opposition from the hospital industry along with community clinics and dialysis centers. But a series of last-minute amendments and agreements, which include a four-year ban on ballot initiatives and referendums brought by the unions or health care industry against one another, cleared the way for the bill’s passage.

The Assembly voted 59-11 to approve the bill Thursday evening just after dinner; the Senate concurred along party lines, 31-9, shortly after 11 p.m. Original provisions of SB 525 narrowly passed the Senate in June with the minimum 21 votes.

“I’m very proud of everyone who came to the table,” Durazo said shortly after the Assembly’s vote. “At first it seemed impossible, like there was just too much to overcome.”

The version of the bill that lawmakers sent to Newsom differs starkly from the original measure. Along the way, amendments introduced a three-tiered phase-in that would leave some workers at government-funded health facilities waiting 10 years to see the full $25 floor. Additional amendments made in the Assembly included a requirement to establish a waiver program by March so health facilities that are in financial distress can temporarily delay payroll hikes.

Swapping minimum wage for dialysis ballot measures

A broad coalition of hospitals, nursing homes, dialysis clinics and community health centers originally denounced the bill and ran attack ads that said the measure would reduce health care access and cost $8 billion a year.

But this week, the union sponsoring the bill cut a last-minute deal with health care industry players and settled on a series of compromises that gave the bill a path forward.

SEIU California, whose various locals represent health care workers across the state, and the dialysis clinics agreed to not bring forward any legislation or ballot measures, at the state or local level, for four years.

In the last three election cycles, SEIU United Healthcare Workers West, which represents more than 100,000 workers, has poured millions of dollars into three unsuccessful propositions that would have required dialysis clinics to have at least one physician, nurse practitioner or physician assistant on duty while patients are under treatment. SEIU-UHW is one of the main proponents of SB 525.

“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,” said Jaycob Bytel, a spokesman for the California Dialysis Council.

The union sponsors of the bill also agreed to a 10-year moratorium on local ordinances that would establish higher minimum wages specifically for health care workers. Municipalities could raise the health care minimum wage starting in 2034.

“As amended today, SB 525 strikes the right balance between significantly improving wages while protecting jobs and safeguarding care at community hospitals throughout the state,” said Carmela Coyle, leader of the California Hospital Association, in a statement before the vote. “We urge the Governor and Legislature to approve this landmark agreement.”

Shortly after the Assembly vote, Durazo said she believed the deal came together because both sides acknowledged that recruiting and retaining health care workers is increasingly difficult and agreed that wages were an important component in addressing the problem. She indicated that the unions agreed to sit down and discuss options for how to get to the $25 wage without hamstringing cash-strapped hospitals.

Durazo also said Assembly Speaker Robert Rivas, D-Hollister, and Senate Speaker Pro Tem Toni Atkins, D-San Diego, were instrumental in bringing the final bill over the finish line.

“You can’t know exactly which moment, which minute, it broke through, but I think all those pieces were important,” Durazo said.

Kudos for Durazo, concerns for rural Californians

Assembly debate consisted largely of messages of support for the bill and for Durazo, but two Republicans rose to voice their opposition to the measure.

Assemblywoman Megan Dahle, R-Bieber, stood firmly against the bill despite the outside pact. She called SB 525 a “one-size-fits-all” solution and said it would have a “disastrous” consequences on rural communities, including those in her sprawling North State district.

“This will, without a doubt, break rural hospitals,” Dahle said. “I will be a strong ‘no.’ And hopefully, when something does detrimentally happen, the rest of you will stand with me when we need to fix it.”

Opposition also came from Assemblyman Devon Mathis, R-Porterville, who raised concerns about how California families could bear the increased costs associated with higher wages for workers. Mathis told his colleagues that his 8-year-old son, Jefferson, who has spina bifida, was just released from the hospital this week after his eighth surgery.

“The workers there at our hospitals are amazing, and they deserve everything that we can do for them,” Mathis said. “But we also have to look at the other side of this, and that’s the cost.

“While I’m tremendously thankful that my son had a successful surgery, I’m not looking forward to the bill from his hospital stay. And part of that bill is going to be that increased cost for the staff.”

A number of Democrats mentioned in their comments that they were initially skeptical of the bill. But, thanks to provisions that ease the financial burden for rural and community clinics, they felt they could support it.

“When I first heard about the bill, I said, ‘There’s no way that this can work for my communities,’” said Assemblyman Jim Wood, D-Healdsburg, whose North Coast district is mostly rural. “And I have to say I’m really impressed with the work that has gone into this.

“With all due respect to our colleague from Bieber, this is not a one-size-fits-all. There is no way I could stand up here and say that I’m supporting this bill tonight if it was.”

Later on in the Senate, Republican Sen. Shannon Grove of Bakersfield relayed a message from an alarmed leader at a hospital in her district. Although the hospital would only have to implement an $18 per hour wage at first, they fear they would face fierce competition from larger hospitals nearby that will be required to pay the higher minimum wage.

When will health workers start earning $25 an hour?

If signed by Gov. Gavin Newsom, the bill’s three-tiered phase-in schedule would leave some employees waiting until as late as 2033 to see their full pay boosts.

Large health care facilities (more than 10,000 full-time employees) and dialysis clinics would introduce a $23-per-hour minimum wage starting June 1, followed by $1 increases each year until $25 an hour was reached by mid-2026. Public health facilities run by counties whose population exceeds 5 million people are also included in this tier.

Hospitals that are largely government-funded, as well as those in small or rural areas, would introduce an $18-per-hour minimum wage in 2024. Over nine years, the wage would then increase 3.5% annually until it reached $25 an hour in 2033.

Community clinics would follow a schedule of $21 an hour in 2024, $22 an hour in 2026 and $25 an hour in 2027.

All other covered health facilities would see the minimum wage phased over five years — $21 an hour in 2024, $23 in 2026 and $25 in 2028.

An analysis from the Assembly’s appropriations committee estimated it would cost the state at least $970 million a year to raise wages for all affected state employees. Analysts caution that the state could also incur billions of dollars in increases to Medi-Cal provider reimbursement rates.

The state isn’t required to increase provider rates to keep up with state-mandated changes, except for certain long-term care facilities. But the Department of Health Care Services said that rate increases would likely be necessary to maintain patient access to providers, especially given that the Medi-Cal program covers approximately a third of Californians.

The state would also need to pay an “unknown, but definitely significant” sum to increase wages for University of California health system employees.