The annual salaries of executives in senior living, nursing homes and other healthcare entities in Los Angeles would be capped at $450,000 under an ordinance proposed by the Service Employees International Union-United Healthcare Workers West.
The limit, backers say, would ensure that the annual pay for executives, managers and administrators of privately owned healthcare facilities and hospitals in the city would not exceed the annual pay of the president of the United States, according to the initiative.
According to the proposed Limit Excessive Healthcare Executive Compensation Ordinance, “the compensation paid to CEOs, executives, managers, and administrators of hospitals and other healthcare facilities often is excessive, unnecessary, and inconsistent with the mission of providing high-quality, affordable medical care for all.”
In addition to skilled nursing facilities and residential care facilities for the elderly, the ordinance would apply to licensed general acute care hospitals and acute psychiatric hospitals, as well as facilities that are part of an integrated healthcare delivery system, defined as “a system that includes one or more hospitals and covered physician groups, healthcare service plans, medical foundation clinics, or other facilities or entities, where the hospital or hospitals and other facilities or entities are related through.”
“If passed, hospitals, skilled nursing facilities and residential care facilities will need to consult with qualified counsel about how best to structure executive compensation packages to attract and retain qualified executive talent,” attorneys at Pillsbury Winthrop Shaw Pittman wrote. “They will also need to carefully comply with annual reporting obligations, which will require certifications under penalty of perjury.”
Pay rates for healthcare workers are lagging behind rates for workers in other fields, according to SIEU-UHW.
“While many healthcare workers receive less than $25 an hour, healthcare executive salaries and bonuses have continued to rise,” the union stated.
A California bill that proposes increasing the minimum wage to $25 from its current $15.50 for direct care workers and support staff members has met with criticism from senior living industry advocates.
According to law firm Pillsbury Winthrop Shaw Pittman, “If the [proposed SIEU-UHW] initiative officially qualifies for the ballot, the Los Angeles City Council will choose whether to adopt the initiative outright as an ordinance or instead refer it to voters for the 2024 ballot.”