New health care worker minimum wage takes effect June 1; IPAs and small physician practices exempt

April 30, 2024

On June 1, 2024, a new state law takes effect that phases in minimum wage increases for health care workers (SB 525 – Durazo). As of that date, physician groups with 25 or more physicians, and other types of health care facilities that meet certain criteria regardless of their size—such as urgent care clinics, community and other licensed clinics, ambulatory surgical centers and hospitals—must comply with the new minimum wage requirements. (Practices are encouraged to consult the complete list of covered health care facilities in the law to confirm whether it applies to them.)

Through California Medical Association (CMA) advocacy, SB 525 was amended to exempt medical group practices of 24 or fewer physicians and IPAs. CMA’s advocacy also ensured that physician practices would not face more drastic and immediate wage increases proposed or passed in some local jurisdictions and statewide that would be more difficult to weather.

With a gradual implementation, the ramp-up more closely aligns with wage trajectories that are anticipated to occur naturally due to economic pressures outside of SB 525, including existing law that requires an annual assessment and adjustment of the minimum wage to reflect inflation. SB 525, which was signed into law in October 2023, ended efforts to move the fight to local and state ballot measures across the state, many of which sought immediate, rather than phased-in, minimum wage increases to $25, as well as limits on the pay of health care executives. CMA will be closely monitoring how the new law impacts physician practices and patient care, especially small and rural practices, hospitals and clinics.

The following chart shows when SB 525 wage increases would go into effect for each category of covered health care employers:

Sector 2024 2025 2026 2027 2028
Physician practices/groups with 24 or fewer physicians Exempt
Physician groups with 25 or more physicians $21   $23   $25
Physician groups part of large health systems with more than 10,000 workers and dialysis clinics $23 $24 $25    
Community clinics, rural health clinics, urgent care clinics and other licensed clinics $21       $25
Hospitals with high mix of Medi-Cal and Medicare patients and rural independent hospitals $18 Increase 3.5% annually until it reaches $25 in 2033

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