California Employers Watch Closely as Kaiser Permanente Navigates Proposed Labor Deal Linking Bonuses to Patient Care

In a noteworthy development following a three-day strike, Kaiser Permanente and a coalition of unions reached a tentative agreement that carries substantial implications for employers across the state, particularly within the healthcare sector. 

The tentative agreement defused what could have been the most extensive healthcare strike in the United States, involving over 75,000 workers across six states and the District of Columbia. Kaiser Permanente serves approximately 12.7 million members across eight states, primarily in the Western region, and the District of Columbia, and operates both hospitals and clinics alongside its coverage services.

The ratification process for this tentative agreement was set to take place from October 18 to 21. During this period, workers will have the opportunity to review and vote on the proposed contract, determining whether it will become an official labor agreement.

Pending ratification, the proposed contract includes the establishment of a new minimum wage structure, which sets the minimum wage at $21 per hour for California workers starting June 1, 2024, and increases it to $23 per hour in 2026. Over a four-year period, Kaiser Permanente workers will receive a 21% wage increase. The proposed contract also seeks to remove protected leaves, such as those related to FMLA, workers' compensation, union leave, PTO, military leave, and jury duty from being counted towards an employee’s attendance goals.

Linking Bonuses to Patient Care

The tentative agreement includes several important provisions, one of which involves the Performance Sharing Program. Under this program, employees receive bonuses based on various performance metrics. These metrics include the ability to improve patient welfare markers such as lowering patient blood pressure and administering preventative vaccines. This innovative bonus structure, if successful, could set a precedent for other healthcare providers in California, potentially raising the overall quality of care statewide.

If ratified and implemented successfully, this labor agreement has the potential to establish new industry standards for performance bonuses based on the quality of healthcare services in California.