Lesson Last Updated: November 21, 2023

Lesson Highlights

Any time a law broadly applies to “health care providers,” our therapy clients have questions. And for good reason! They are often lumped together with medical doctors/physicians under the law, and it can be confusing to navigate any new regulations that are handed down. 

In 2022, the California legislature passed SB 525, which will become Sections 1182.14 and 1182.15 of the Labor Code on January 1, 2024. This bill increased the minimum wage for employees that are employed by “covered health care facilities.” This law is extremely detail-specific and has created some confusion. The good news is that we’ve already read it and can help you better understand what it includes.

In this lesson, we’ll explain:

• How we broke down the text of SB 525;
• Which external sources we referred to to get the answers we needed; and
• How everything comes together.

Breaking Down the Text of This Law

As lawyers, the first place we look when figuring out how a law will apply is, well, the law itself. We carefully comb through the text and break everything down into its component parts. This law is no different, so let’s do this together. Every quote below is directly from the text of the SB 525 unless otherwise noted. We’ll bold sections that are worth paying extra attention to.

“Workers in the health care industry, including workers at general acute care hospitals, acute psychiatric hospitals, medical offices and clinics, behavioral health centers, and residential care centers provide vital health care services to California residents, including emergency care, labor and delivery, cancer treatments, and primary and specialty care. Similarly, dialysis clinics provide life-preserving care to patients with end-stage renal disease and are part of the continuum of kidney care that also includes hospitals and health systems. Residents and visitors to the state rely on access to this high-quality health care.” [1] Clearly, the intention of this law is quite broad, but let’s keep going to narrow it down.

“Therefore, this section occupies the whole field of wages, salary, or compensation for covered health care facility employees, and applies to all cities and counties, including charter cities, charter counties, and charter cities and counties during the stabilization period provided by this section.” [1] When something in the law “occupies the whole field” it means it’s the definitive source of law for something. Here, the text is communicating that this is what controls the minimum wage for healthcare workers employed by “covered health care” facilities, and any local ordinances that might be applicable aren’t going to supersede this law.

We read on to find that “‘covered health care facility’ means any of the following:

• A facility or other work site that is part of an integrated health care delivery system.
• A licensed general acute care hospital, as defined in subdivision (a) of Section 1250 of the Health and Safety Code, including a distinct part of any such hospital.
• A licensed acute psychiatric hospital, as defined in subdivision (b) of Section 1250 of the Health and Safety Code, including a distinct part of any such hospital.
• A special hospital, as defined in subdivision (f) of Section 1250 of the Health and Safety Code.
• A licensed skilled nursing facility, as defined in subdivision (c) of Section 1250 of the Health and Safety Code, if owned, operated, or controlled by a hospital or integrated health care delivery system or health care system.
• A patient’s home when health care services are delivered by an entity owned or operated by a general acute care hospital or acute psychiatric hospital.
• A licensed home health agency, as defined in subdivision (a) of Section 1727 of the Health and Safety Code.
• A clinic, as defined in subdivision (b) of Section 1204 of the Health and Safety Code, including a specialty care clinic, or a dialysis clinic.
• A psychology clinic, as defined in Section 1204.1 of the Health and Safety Code.
• A clinic as defined in subdivision (d), (g), or (l) of Section 1206 of the Health and Safety Code.
• A licensed residential care facility for the elderly, as defined in Section 1569.2 of the Health and Safety Code, if affiliated with an acute care provider or owned, operated, or controlled by a general acute care hospital, acute psychiatric hospital, or the parent entity of a general acute care hospital or acute psychiatric hospital.
• A psychiatric health facility, as defined in Section 1250.2 of the Health and Safety Code.
• A mental health rehabilitation center, as defined in Section 5675 of the Welfare and Institutions Code.
• A community clinic licensed under subdivision (a) of Section 1204 of the Health and Safety Code, an intermittent clinic exempt from licensure under subdivision (h) of Section 1206 of the Health and Safety Code, or a clinic operated by the state or any of its political subdivisions, including, but not limited to, the University of California or a city or county that is exempt from licensure under subdivision (b) of Section 1206 of the Health and Safety Code.
• A rural health clinic, as defined in paragraph (1) of subdivision (l) of Section 1396d of Title 42 of the United States Code.
• An urgent care clinic.
• An ambulatory surgical center that is certified to participate in the Medicare Program under Title XVIII (42 U.S.C. Sec. 1395 et seq.) of the federal Social Security Act.
• A physician group.
• A county correctional facility that provides health care services.
• A county mental health facility.”

There are also a few exceptions: “‘Covered health care facility’ does not include either of the following:

1. A hospital owned, controlled, or operated by the State Department of State Hospitals.
2. A tribal clinic exempt from licensure under subdivision (c) of Section 1206 of the Health and Safety Code, or an outpatient setting conducted, maintained, or operated by a federally recognized Indian tribe, tribal organization, or urban Indian organization, as defined in Section 1603 of Title 25 of the United States Code.” [1]

Based on the types of clients we work with, which are almost always small private practices, there are four (4) main categories we need to investigate further; they’re bolded above. 

When we get to this stage, where the law starts referring to external documents or other code sections, things can get complicated. Although we want to give you a feel for how a lawyer would approach a review of a new law, we don’t recommend using this as a guide for substituting your judgment for that of an attorney. This is just to help demystify the overall process!

Referring to External Sources

Now that we know the technical language of who is considered a “Covered health care facility,” let’s figure out what that means in actual human language:

• “A clinic, as defined in subdivision (b) of Section 1204 of the Health and Safety Code, including a specialty care clinic, or a dialysis clinic.” Now we head to the Health and Safety Code! That portion of the law defines the following types of clinics: community primary care clinics, free primary care clinics, surgical clinics, chronic dialysis clinics, rehabilitation clinics, and alternative birth centers. [2] No mention of therapy private practices or clinics here, so we know that this will not apply to those workplaces. Check!
• “A psychology clinic, as defined in Section 1204.1 of the Health and Safety Code.” The Health and Safety Code defines a psychology clinic as “a clinic which provides psychological advice, services, or treatment to patients, under the direction of a clinical psychologist as defined in Section 1316.5, and is operated by a tax-exempt nonprofit corporation which is supported and maintained in whole or in part by donations, bequests, gifts, grants, government funds, or contributions which may be in the form of money, goods, or services. In a psychology clinic, any charges to the patient shall be based on the patient's ability to pay, utilizing a sliding fee scale. No corporation other than a nonprofit corporation, exempt from federal taxation under paragraph (3), subsection (c) of Section 501 of the Internal Revenue Code of 1954, as amended, or a statutory successor thereof, shall operate a psychology clinic.” [3] This means that some psychology practices could be subject to the minimum wage under this law, but only if they’re operated by a tax-exempt organization, which means a nonprofit.
• “A clinic as defined in subdivision (d), (g), or (l) of Section 1206 of the Health and Safety Code.” This is where it gets fun! Subdivision (d) describes “a clinic conducted, operated, or maintained as outpatient departments of hospitals”; subdivision (g) describes “a clinic operated by, or affiliated with, any institution of learning that teaches a recognized healing art and is approved by the state board or commission vested with responsibility for regulation of the practice of that healing art”; and subdivision (i) describes “the offices of physicians in group practice who provide a preponderance of their services to members of a comprehensive group practice prepayment health care service plan subject to Chapter 2.2 (commencing with Section 1340).” [4] Now, there’s a possibility that any of these sections could apply to you, but they usually don’t apply to our clients. If in doubt, contact an attorney!
• “A psychiatric health facility, as defined in Section 1250.2 of the Health and Safety Code.” The code describes “a health facility, licensed by the State Department of Health Care Services, that provides 24-hour inpatient care for people with mental health disorders or other persons described in Division 5 (commencing with Section 5000) or Division 6 (commencing with Section 6000) of the Welfare and Institutions Code.” [5] Again, very unlikely that this is any of our clients!

How it All Comes Together

So here’s what this means: in all likelihood, the minimum wage requirements of this law will not apply to small, private practice therapists unless they’re somehow working within a broader framework (i.e., providing services to a larger network of providers) or are otherwise connected to a hospital.

If, for some reason, you are considered a “covered health care facility,” you’re probably wondering now what the minimum wage is. Well, it depends on the type of employer you are! The number could be anywhere from $18-25 per hour, and goes into effect on January 1, 2024.

So if you believe that you fit under any of the categories described above, you should speak with an attorney to determine the exact minimum wage for your business.

This Lesson's Sources:

[1] Senate Bill No. 525

[2] Cal. Health & Saf. Code § 1204

[3] Cal. Health & Saf. Code § 1204.1

[4] Cal. Health & Saf. Code § 1206

[5] Cal. Health & Saf. Code § 1250.2