California’s healthcare minimum wage law is changing in 2026 — and for employers, it’s not a small adjustment.
In the video podcast above, San Diego employment attorney Ward Heinrichs breaks down what healthcare employers need to know about California’s new minimum wage requirements, including who is covered, how the phased increases work, and the compliance challenges that make this law, in his words, “a bear.”
Below, you can read Ward’s in-depth article, “California Healthcare Minimum Wage: It’s a Bear!”, which provides additional legal insight and practical guidance for employers navigating these complex changes. For even more comprehensive coverage, be sure to explore his California Employment Law Digital Podcast Magazine — a valuable resource for business owners, HR professionals, and leadership teams working to stay compliant in an evolving regulatory landscape.
Watch the conversation, then dive deeper with the article below.
CALIFORNIA HEALTHCARE MINIMUM WAGE: IT’S A BEAR!
By S. Ward Heinrichs, Esq.
As a general rule, healthcare workers now enjoy significantly higher minimum wage rates than other employees in California. However, these healthcare minimum wage rates vary widely depending on the type of healthcare provider. For example, large hospitals that employ 10,000 or more workers must now pay a $24‑per‑hour minimum wage, while small county‑run hospitals are required to pay only $18.63 per hour. On July 1, 2026, those two types of hospitals will pay $25 per hour and $19.32 per hour, respectively. By comparison, non‑healthcare employers in California must pay only $16.90 per hour, although many cities require higher local minimum wages.
The long‑term goal of the healthcare minimum wage law is to raise all healthcare workers’ minimum wage to $25 per hour, but some types of facilities will reach that rate much more slowly than others. The last group of facilities will not be required to pay $25 per hour until 2033.
Below is a breakdown of the healthcare minimum wage by facility type.
Large Healthcare Systems & Dialysis Clinics (Group 1)
Large Healthcare Systems include any of the following:
• 10,000 or more Full‑Time Equivalent Employees: Any covered healthcare facility with 10,000 or more FTE employees.
• Integrated Health Care Delivery Systems: A group of related entities that includes at least one hospital and one or more additional entities (such as physician groups or health plans) that share a common brand, parent company, or management.
• Major County Systems: Facilities owned or operated by a county with a population of more than 5 million as of January 1, 2023.
• Dialysis Clinics: All dialysis clinics (and the entities that own or operate them) are automatically included in this highest wage category, regardless of employee count.
Examples include Kaiser Permanente, University of California Health, and Cedars‑Sinai Health System. These systems must now pay a minimum wage of $24 per hour, increasing to $25 per hour on July 1, 2026.
Safety Net and Rural Independent Hospitals (Group 2)
A healthcare employer falls into this category if it meets at least one of the following definitions:
• Hospitals with a High Governmental Payor Mix: A licensed acute care hospital where at least 90% of patients are covered by Medicare or Medi‑Cal.
• Independent Hospitals with an Elevated Governmental Payor Mix: A hospital where at least 75% of patients are covered by Medicare or Medi‑Cal, provided it is not owned or operated by a parent entity with two or more separately licensed hospitals.
• Rural Independent Covered Health Care Facilities: A hospital located in a non‑metropolitan county or defined as a “small and rural hospital” under the Health and Safety Code. It must not be part of an integrated delivery system or owned by a parent entity with multiple hospitals.
• Small County Facilities: Covered healthcare facilities owned, affiliated, or operated by a county with a population under 250,000 as of January 1, 2023.
Examples include Antelope Valley Hospital, Barton Memorial Hospital Center, Bear Valley Community Hospital, and Catalina Island Medical Center. These facilities must currently pay a minimum wage of $18.63 per hour, increasing to $19.28 on July 1, 2026. After that, they will face annual 3.5% increases until July 1, 2033, when they must pay $25 per hour.
Clinics (Group 3)
Clinics are facilities that provide primary, free, or specialized community care. Tribal clinics are exempt, as are small group practices unless they are part of a Large Healthcare System.
The following typically fall into the Clinic category:
• Community Clinics: Non‑profit clinics funded by donations or government support, charging patients based on ability to pay.
• Primary Care Clinics: Clinics providing first‑contact medical services, including non‑governmental free clinics.
• Rural Health Clinics: Facilities defined under federal law (42 U.S.C. § 1396d(l)) that are not exempt from state licensing.
• Urgent Care Clinics: Only those owned by or affiliated with a primary care or rural health clinic.
• Intermittent Clinics: Clinics operated by a primary care or community clinic at a separate location for limited hours (no more than 40 hours per week).
These facilities must now pay a minimum wage of $21 per hour, increasing to $22 per hour on July 1, 2026, and reaching $25 per hour by July 1, 2027.
Covered Facilities Not in Other Categories (Group 4)
This group includes all covered healthcare facilities that do not fall under Large Systems, Safety Net Hospitals, or specific Primary Care Clinics.
These include:
• Physician Groups: Medical practices or partnerships with 25 or more physicians.
• Mental Health Facilities: Licensed psychiatric health facilities, mental health rehabilitation centers, and county mental health facilities.
• Specialized Outpatient Clinics: Facilities where patients stay less than 24 hours, such as psychology clinics, Medicare‑certified ambulatory surgical centers, unaffiliated urgent care clinics, and alternative birth centers.
• Home‑Based Services: Licensed home health agencies and entities delivering in‑home care (if owned by a covered hospital).
• County Support Facilities: County correctional facilities that provide internal healthcare services.
• Affiliated Residential Care: Licensed residential care facilities for the elderly, but only if affiliated with or controlled by a general acute care hospital or its parent entity.
• Medium‑Sized County Facilities: Facilities in counties with populations between 250,000 and 5 million.
These providers must now pay a minimum wage of $21 per hour, increasing to $23 per hour on July 1, 2026, and reaching $25 per hour by July 1, 2028.
Exempt Facilities
Not all facilities are required to pay the state healthcare minimum wage.
Exempt facilities include:
• Stand‑Alone Skilled Nursing Facilities (SNFs): Covered only if owned or operated by a hospital or integrated system.
• Small Private Practices: Physician groups with fewer than 25 physicians.
• Government‑Exempt Sites: Facilities operated by the California Department of State Hospitals or tribal organizations.
Based in San Diego, California the Employment Law Office of Ward Heinrichs represents both employers and employees in almost all areas of labor law. He and his firm litigate cases that have been filed in many different parts of California. Keep up with him at https://bestemploymentattorneysandiego.com/
