Beginning July 1, 2026, covered California healthcare facilities must apply new minimum wage rates under Senate Bill (SB) 525, which created a statewide minimum wage schedule for covered healthcare workers.
The law uses different wage schedules based on facility type, including large healthcare systems, dialysis clinics, community and rural clinics, safety net hospitals, and other covered healthcare facilities.
This update applies to California healthcare employers operating covered healthcare facilities under SB 525 and took effect on July 1, 2026.
What Employers Need to Do
- Confirm whether the organization qualifies as a covered healthcare facility under SB 525 and identify the applicable facility category.
- Identify which employees qualify as covered healthcare workers, including direct patient care roles and support roles such as housekeeping, food service, clerical, billing, and warehouse workers. The covered worker definition is broad and reaches both clinical and non-clinical positions that support healthcare services.
- Update payroll systems to reflect the correct July 1, 2026, rate based on facility category. Confirm that Human Resources Information System (HRIS) or payroll vendor configurations apply the new rate from the first applicable pay period.
- Review wage notices, postings, and pay-rate documentation to ensure compliance with the updated rates.
- Train HR, payroll, and operations leaders on the facility category and applicable rate so wage decisions, new hire offers and pay adjustments remain consistent across the organization.
Overview
New Rates Effective July 1, 2026
- Large Healthcare Systems, Dialysis Clinics, and Large County-run Facilities: $25 per hour.
- Community Clinics, Rural Health Clinics, and Qualifying Urgent Care Clinics: $22 per hour.
- Other Covered Healthcare Facilities (Including Physician Groups with 25 or More Physicians): $23 per hour.
- Safety Net Hospitals, Rural Independent Facilities, and Small County-run Facilities: Approximately $19.28 per hour, increasing by 3.5% annually until reaching $25 per hour in 2033.
Who is Covered
- Covered workers must work for a covered healthcare facility and provide healthcare services or support those services.
- Covered roles span direct care and support positions, including nurses, physicians, caregivers, medical residents, patient care technicians, janitors, housekeeping, clerical, food service, medical billing, schedulers, call center, warehouse, and laundry workers.
- Covered facilities include hospitals, integrated health systems, hospital-operated skilled nursing facilities, dialysis clinics, outpatient and urgent care centers, physician groups, and hospital-affiliated care settings.
- Exclusions include certain state-run facilities, tribal clinics, and stand-alone skilled nursing facilities.
Why This Matters
Covered healthcare employers must apply the correct wage rate for their facility category beginning July 1, 2026. SB 525 uses multiple wage schedules, and the rates vary significantly by category — meaning facility classification has a direct effect on payroll costs and compliance exposure.
Key Risks for Employers
- Misclassifying the Facility Category: Applying the wrong category could result in significant underpayment exposure given the wide gap between rates.
- Overlooking Support Roles: The covered worker definition is broad and includes many non-clinical positions that employers may not initially identify as covered.
- Payroll System Gaps: Failing to update payroll by July 1, 2026, may create wage-and-hour liability for each affected employee and pay period.
- Inaccurate Wage Notices: Out-of-date wage notices or postings could create separate compliance exposure under California wage notice requirements.
Source References
- California Gives Healthcare Workers A Raise (VensureHR)
- California Gives Healthcare Workers A Raise (VensureHR)
- Senate Bill (SB) 525
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