Healthcare cost payers and employers who pay for health and workers’ compensation insurance have been bracing for the effects of the California mandated increase in pay for healthcare workers.

It might be with some relief to know that California Gov. Gavin Newsom and state legislators have reached an agreement on the 2024 state budget, which includes delaying the start of minimum wage increases for healthcare workers to at least the fall.

Mr. Newsom, Senate President Pro Tempore Mike McGuire, and Speaker of the Assembly Robert Rivas announced the agreement June 22 – less than a month after the governor signed SB 828 in May, which postponed the start of the wage adjustments to July 1, the beginning of the state’s fiscal year.

The legislation signed last month allowed additional time for the governor’s administration to continue to work with state lawmakers and stakeholders to tie provisions related to the healthcare worker minimum wage law, SB 525, to state budget conditions, according to CalMatters.

Under the new agreement, the new minimum wage would be delayed until at least Oct. 15, according to Bloomberg.

If state lawmakers approve the agreement, healthcare workers could begin seeing raises on that date, provided that state revenues from July to September exceed current estimates by at least 3%, according to the publication.

Should that fail to occur, implementation of the raises could be delayed to Jan. 1, Bloomberg reported.

Governor Newsom signed SB 525 in October to gradually raise the minimum wage for healthcare workers to $25 per hour through a series of annual increases ranging from $18 to $25 per hour, with healthcare facilities expected to reach a $25 per hour minimum wage by June 1, 2028, or, for some in rural locations, 2033.

The governor then indicated he wanted to potentially delay the increases in the face of the state’s projected budget shortfall.

If delayed until January, the new minimum wage is expected to cost the state general fund approximately $600 million in the next fiscal year, according to Bloomberg, which cited preliminary data from the administration.

Mr. Newsom said in a news release that the June 22 agreement “sets the state on a path for long-term fiscal stability – addressing the current shortfall and strengthening budget resilience down the road.”

Approximately 426,000 workers are expected to benefit from the law, according to the latest estimates from the UC Berkeley Labor Center. This includes medical assistants, front office staff, medical billing personnel, patient techs, janitors, food service workers, among others. The law also applies to contracted workers who work primarily on-site at an eligible facility.

The delay preserves a hard-fought victory for one of the state’s largest labor unions – and one of Democrats’ largest campaign donors. Dave Regan, president of Service Employees International Union-United Healthcare Workers West, said workers are disappointed they won’t get raises this summer.