Introduction
Each year, the California Legislature passes a thousand new bills, most of which make it into law. And each year, many of these bills reshape the employment relationship in California between employee-and employer. This article highlights some of the most significant bills impacting physical therapy employers that became effective January 1, 2025.
Healthcare Minimum Wage
Much confusion surrounds the new “healthcare minimum wage” in Senate Bill 525, which requires defined health care workers to receive a wage even higher than the minimum wage. The stated goal is to increase the minimum wage for health care workers to $25 per hour by 2026. The law defines healthcare workers as those who (1) work for certain “health care facilities” that are covered in the new law and (2) provide health care services or support the provision of health care. The bill provided broad definitions for qualifying health care workers[1] and qualifying healthcare facilities.[2]
In late 2024, the Department of Industrial Relations clarified its view of the new law:
Employees of outpatient private practice physical therapy clinics that provide only physical therapy and are not owned, operated, or controlled by a covered health care facility are not covered by the health care minimum wage law unless the practice fits within a covered facility.
Of course, all employers are encouraged to consult legal counsel about this complicated issue.
Are Physical Therapists Exempt Employees?
In light of California law’s and regulations of the workplace, especially in the area of overtime, meal periods and rest breaks, it is important to understand when a physical therapist employee can be exempt versus hourly. Most physical therapists are hourly employees and not entitled to be exempt as they do not meet the qualifications under the Fair Labor Standards Act (federal law) or the Labor Commissioner’s definition. (state law). And many of these are misclassified.
The confusion comes from the “licensed professional exemption” which applies to doctors, lawyers and other licensed professionals. But this exemption does not automatically apply to physical therapists, even though they are licensed professionals.
To be exempt under California law, a physical therapist must meet the following criteria:
Professional, Administrative, or Executive Exemption:
– Duties: Fifty percent of employee’s time must be spent in performing executive, administrative, or professional duties;
– Minimum Salary Threshold: Must make a salary of at least twice the state’s minimum wage for full-time employment;
– Independent Judgment: Must exercise independent judgment. This means physical therapists can meet this requirement using their own discretion and autonomy in decision making, but a written job description is essential.
In Levine v. Unity Health System,[3] the United States District Court found that although some job duties included administrative tasks, the primary therapist’s main practice was to assess patients and help develop appropriate treatment plans and administer therapy. Thus, treating patients alone is not enough. For further discussion please see The Exempt and Non-Exempt Conundrum for Physical Therapists in California.[4]
Non-Compete Agreements
Non-Compete Agreements or Covenants Not to Compete have been illegal in California for quite some time. Such an agreement requires an employee to agree that he or she will not take another job with a similar business that competes with the former business. The general rule is that such agreements can be enforceable for owners of a business, but not employees.
Now, pursuant to AB 1076, an employer has an obligation to notify current employees (anyone employed after Jan 1, 2022) that any noncompete agreement or clause they signed is now void unless it falls under one of the stated exemptions.[5]These notices were required to go out to all employees by February 14, 2024. Civil penalties up to $2,500 can be assessed for failure to do so.
Conclusion
All employers in California must keep up with the extensive changes in employment law each year, most of which are effective January 1 of the next year after the bill is signed.
If you are a physical therapist or practice owner, please do not hesitate to contact Simas & Associates, Ltd. We offer discounted rates and special services to CPTA members. You can reach us at 888.999.0008 or at info@simasgovlaw.com.
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Steven L. Simas is the founder and president of the Health Care and Government and Administrative Law firm of Simas & Associates, Ltd., in Sacramento, San Diego, San Jose, San Luis Obispo, and Santa Monica, California. They specialize in the areas of Healthcare Regulation, Professional Licensing and Regulation, and Workplace and Employment Regulation. The firm has proudly served as legal counsel to the California Physical Therapy Association since 2004 and can be reached at 888.999.0008 and info@simasgovlaw.com.
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[1] Qualifying health care workers include:
- Patient care-related services
- Nursing
- Caregiving
- Services by residents, interns, or fellows;
- Supportive Patient Care Services
- Technical and ancillary services
- Janitorial work, housekeeping; groundskeeping;
- Business office clerical work;
- Medical coding and billing;
- Call center, scheduling; gift shop work.
- Guard, food services, laundry services
[2] Qualifying health care facilities include:
- Hospitals and Hospital Systems
- Care in Residential Settings
- A physician’s group (25+ physicians only)
- County mental health facilities
- County correctional facility
- Certain Outpatient clinics, such as rehab, dialysis, surgical center, urgent care
- Clinics Providing Primary Care
[3] Levine v. Unity Health System, (2012) 847 F.Supp.2d 507.
[4] See https://simasgovlaw.com/exempt-vs-nonexempt-pt/.
[5] These agreements are void and unenforceable under B&P Code § 16600 unless:
- The agreement is between an employer and employee and is designed to protect the employer’s trade secrets.
- The agreement is ancillary to the sale of a business.
- The agreement is between partners who agree not to compete with the partnership or solicit its partners or clients after the dissolution of the partnership.