California Senate Bill 525 (SB 525) imposes a significant wage increase for health care workers, including those working for contractors and subcontractors of covered health care facilities. This legal alert briefly highlights how SB 525 applies to contracted workers at private health care centers.
Eligibility for the Increased Wage
SB 525 requires health care workers at covered facilities to be paid a higher minimum wage. This applies not just to employees, but also includes contracted workers, such as janitorial services, security guards, and landscapers to name a few. For private health care facilities, workers who spend more than fifty percent of their workweek at a privately covered health care facility must receive the increased wage for all hours worked at that facility. If a worker spends less than fifty percent of their time at the facility, they are entitled to the higher wage for the time spent at the covered facility, but only if the health care facility is their employer or joint employer. The guidelines for workers employed by public health care facilities, such as cities and counties, are different.
Liability for Health Care Facilities and Contractors
Health care facilities may be held responsible for wage violations even when the workers are employed by contractors or subcontractors. Under California law, a joint employer relationship may be established if the health care facility exercises control over the workers' wages, hours, or working conditions. The law looks at the totality of the relationship, and even indirect control over these areas could expose a health center to potential liability. As a result, health care employers must ensure contractors are in compliance with the wage increase requirements.
Risks of Non-Compliance with SB 525
If a health care facility or contractor fails to comply with SB 525 wage requirements, they face several significant risks of individual lawsuits or PAGA class actions and potential damages in the form of back wages, waiting time penalties, statutory penalties, attorney's fees, and costs.
Minimizing Risk and Managing Liability
To reduce the risk of non-compliance and limit liability, health care facilities and contractors should carefully structure their operations and contracts. While specific contractual language can help, it is critical for both parties to ensure they fully understand their obligations under SB 525.
Given the complexity of SB 525 and the significant risks associated with non-compliance, health care facilities, and contractors should consult with legal professionals to review their operations, contracts, and policies. Legal counsel can assist in navigating the nuances of joint employer relationships and help develop strategies to minimize exposure to liability.
Originally published February 20, 2025
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
