Managing and Maximizing Impacts of California SB 525 

Healthcare Minimum Wage Update: On Friday, May 31, 2024, Governor Gavin Newsom signed SB 828, which effectively delays the implementation of the new minimum wage schedules outlined in SB 525 until July 1, 2024. Despite this delay, Mercer understands that many healthcare organizations have already prepared for and are likely implementing the new minimum wages as of June 1. We encourage organizations to maximize the impacts of their responses by mitigating pay compression and considering their holistic total rewards strategies.

California Senate Bill 525 (“SB 525”) – signed into law by Governor Gavin Newsom in October 2023 – will increase the minimum wage of “covered healthcare employees” to $25/hour in the coming years. Healthcare organizations in the state must comply with these new wage schedules, but they can also capitalize on this opportunity to attract and retain critical and scarce talent.

SB 525 aims to improve the economic conditions of healthcare employees in California. By establishing elevated minimum wage schedules for a broad spectrum of jobs, this legislation recognizes the importance, criticality, and existing shortage of those who serve and support residents’ and visitors’ healthcare needs.

New minimum wage regulations are set to begin on June 1, 2024. Due to budget negotiations, the official implementation of the law may be delayed; though many organizations are still preparing for June 1 implementation to ensure compliance and maintain competitiveness.