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California SB 525: Healthcare Worker Minimum Wage Rises to $25/Hour

California's tiered healthcare worker minimum wage under SB 525 reached $25/hour in 2026 for the largest covered facilities — large health systems, dialysis clinics, and facilities in the biggest counties. Other facility tiers are on slower schedules, and small physician groups are exempt entirely.

Key Takeaways for Payroll Professionals
  • California's tiered healthcare worker minimum wage under SB 525 stepped up again in 2026
    It reached $25 per hour at the largest covered facilities — large integrated health systems, dialysis clinics, and facilities in counties with populations over 5 million.
  • Other covered facilities are on a slower schedule
    Many hospitals and physician groups with 25 or more physicians follow a separate, slower schedule that reaches $25/hour in later years.
  • Small physician groups are exempt
    Physician groups with 24 or fewer physicians are entirely exempt from SB 525's wage tiers.
  • Local wage ordinances are preempted through 2034
    SB 525 includes a 10-year moratorium (through January 1, 2034) preempting local ordinances that would otherwise impose additional wage requirements on covered healthcare facility employees.
  • This wage structure sits on top of the general minimum wage
    It is separate from and in addition to California's general statewide minimum wage, which applies to non-healthcare employees and to healthcare employees not covered by SB 525's specific facility definitions.

What Changed and Why It Matters

California Senate Bill 525, signed into law by Governor Newsom, established a first-in-the-nation tiered minimum wage schedule specifically for healthcare workers at covered facilities, phased in over several years starting in 2024. The largest and best-resourced facility tier — large integrated health systems, dialysis clinics, and facilities located in counties with populations exceeding 5 million — reached the law's target rate of $25 per hour on its 2026 step-up date, following $23/hour and $24/hour in the two prior years.

Because SB 525 applies specifically to defined categories of "covered health care facilities" and "covered health care employees," it operates independently of, and in addition to, California's general statewide minimum wage. Employers with healthcare operations must determine facility-by-facility and role-by-role whether SB 525's tiers apply, since the law does not cover all healthcare employers uniformly.

📋 SB 525 Minimum Wage Tiers, Largest Covered Facilities
California DIR · SB 525 (2023)
Effective PeriodHourly Minimum Wage
2024$23.00
2025$24.00
2026$25.00

Applies to: integrated health systems and dialysis clinics with 10,000 or more full-time-equivalent employees, and covered facilities located in counties with a population over 5 million.

Other Covered Facility Tiers Move More Slowly

Not every covered healthcare employer is on the $25/hour-by-2026 timeline. SB 525 sets out a second track for most other covered facilities — including many hospitals, skilled nursing facilities, and physician groups above the size exemption threshold — that reaches $25/hour on a later schedule, and a third, slower track for certain community, rural, and specified clinic types. Employers should confirm which tier applies to each of their California healthcare facilities individually rather than assuming a single statewide rate.

⚠️
Physician Groups of 24 or Fewer Physicians Are Exempt
SB 525 explicitly exempts physician groups with 25 or fewer physicians from its wage tiers entirely. Practices near this size threshold should confirm their physician count and covered-employee classifications carefully, since crossing the threshold brings the practice under SB 525's schedule.

Local Ordinance Preemption

SB 525 also included a ten-year moratorium, running from September 6, 2023 through January 1, 2034, that preempts California cities and counties from enacting or enforcing local minimum wage ordinances specifically targeting healthcare facility employees covered by the state law. This means covered healthcare employers do not need to separately track city- or county-level healthcare-specific wage ordinances during the moratorium period, though general local minimum wage ordinances that are not healthcare-specific may still apply to other employee categories at the same facility.

Action Checklist for Payroll Teams with California Healthcare Operations

1
Required
Confirm which SB 525 tier applies to each California facility
Determine facility size, county population, and facility type to identify whether the $25/hour-in-2026 schedule, a slower schedule, or the physician-group exemption applies.
2
Required
Verify payroll systems reflect the correct 2026 rate for each covered facility
Confirm hourly rates for covered health care employees at the largest facility tier reflect $25.00/hour, and that other tiers reflect their own applicable 2026 step.
3
If Applicable
Confirm physician group size for the 24-or-fewer exemption
Practices near the 24-physician threshold should document their physician count to support the exemption determination in the event of an audit or wage claim.
4
Best Practice
Distinguish SB 525 coverage from California's general minimum wage
Employees at a covered facility who do not meet SB 525's definition of "covered health care employee" remain subject to California's general statewide (or higher local, where applicable) minimum wage rather than the SB 525 schedule.
📎 Source & Attribution
"Health Care Worker Minimum Wage — Frequently Asked Questions"
Source: California Department of Industrial Relations (DIR)  ·  Published: 2026  ·  View source document ↗
This article represents independent analysis and editorial commentary by the einTime team, prepared for the benefit of payroll professionals. Content draws on publicly available regulatory documents and government publications. All compliance decisions should be verified against applicable regulatory guidance and reviewed with a qualified tax advisor or employment counsel.
ET
einTime Editorial Team
Payroll Compliance Analysts · einTime Resource Center
The einTime editorial team tracks federal, state, and local regulatory developments affecting payroll operations and translates regulatory complexity into practical guidance for payroll professionals.
📅 Key Deadlines
2026
Largest facility tier reaches $25/hour
2034
SB 525 local preemption moratorium ends (Jan 1)
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🔗 Source Reference
Health Care Worker Minimum Wage — Frequently Asked Questions
California Department of Industrial Relations (DIR) · 2026
View source document ↗
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