California’s Health Care Workers Minimum Wage Law Takes Effect July 1, But How Does It Impact the Home Care Industry? Chapter Seeking Clarification

California’s new Health Care Workers Minimum Wage Law (S.B. 525) has received a lot of attention for phasing in a $25 minimum wage for many health care employees. Even as the law takes effect in less than two weeks, there are varying opinions about how it impacts home care companies in the state.

An analysis by HCAOA Associate Member Polsinelli finds that the new law may not impact many home care companies since they are only subject to the law in two instances: those who subcontract with health care facilities and those agencies that are part of a hospital system. 

Attorney Bob King of Legally Nanny is taking a more conservative approach, advising his clients in California that if they staff caregivers in any of the facilities listed in S.B. 525, they must pay the higher minimum wages specified in the statute. The exact minimum wage will depend on the type of facility, how many employees it has, and the phase-in of the minimum wage increase, all as defined in the statute.

“If a health care facility hires a home care organization (HCO) to provide caregivers as staff in the facility, those caregivers are covered under S.B. 525 and must be paid the higher minimum wage,” King said. “However, even when a private client hires a HCO to provide services to that private client in a covered facility, that caregiver is an employee ‘performing contracted or subcontracted work primarily on the premises of a health care facility to provide health care services or services supporting the provision of health care.’ Thus, that employee would also be a covered employee subject to the S.B. 525 minimum wage.”

He notes that if an agency staffs a caregiver anywhere other than the facilities specified in S.B. 525, for example, in a private home, then the increased minimum wage law does not apply.

The HCAOA California Chapter acknowledges the validity of both interpretations and advises members to move forward based on the level of risk tolerance for their clients. The Chapter is working with the chapter lobbyist to request the legislative council to weigh in and provide a legal perspective on the matter. Stay tuned for additional updates and clarification.