Big difference in pay with 2 agencies

[ASHRN828]

I had an odd conversation with a recruiter from American Traveler the other day.

First off, I have been an RN for 12 years, have 5 years of critical care experience in a Trauma II Hospital and have just signed up with 2 agencies.

However, the first agency I was talking to offered $1250/wk take home pay after taxes, for a position in South Carolina in the ICU, which is 2 hours away from my house. I thought those numbers sounded very good. They pay you with an untaxed stipend and your hourly is $10/hr. so the majority of the money is not taxed.

Agency #2, American Traveler was offering $600 LESS a month for the same position in South Carolina, which I find to be so odd. When I told the flighty recruiter, she said that the $10/hr. will alert the IRS and that I WILL be audited, and that they would never do that to me and that the number was the best they could do.

I'm not really sure what to believe. How can the difference between 2 agencies be so different for the SAME job?

-Rachel

[NedRN]

The IRS has no idea what your hourly is, so that is not a factor in an audit. They only see quarterly reported income from the employer. In general, nurses do have the kind of income that makes for a high audit risk. Even a large swing in reported annual income won't do it. Even if you do get audited, you will not have done anything wrong in this situation, nor will you have to pay additional taxes.

What can increase your audit risk (no one wants an audit, even if you are squeaky clean), is working for an agency that is an IRS target as many agencies currently are. If so, some travelers will be audited ahead of the agency audit so that the IRS can see what the agency practices are. Having low hourly wages is not an issue by itself. There is very little way to tell which agencies are a target, but low hourly wages could be trouble. Again, not to you directly - but you do want to have a solid tax home if you do get audited for any reason.

Agencies negotiate bill rates with hospital privately and can have rates that vary from one another by as much as $8 an hour, although that is more than usual excepting rapid response (crisis) rates versus regular rates.

They also have different operating efficiencies, some requiring more money from the bill rate to run the agency, pay recruiters, investors and so on. Typically larger agencies have higher overhead than smaller agencies. The agency gross profit margin (all the money that is left over after paying all direct traveler related expenses) can range from 18% to 40% of the bill rate - 24% being the current industry average. If you take these percentages and apply them to the typical bill rate of $60 an hour, you will appreciate how just this factor can create large pay differences between agencies.

Now lets look at your actual pay scheme. Just for arguments sake, lets say the two agencies start with a total of $40 an hour total compensation, one of them paying $10 an hour taxable, and the other $20 an hour taxable out of that same pot of money. Your income taxes (federal, state, and FICA) at about a third of the total will reduce your check by $3.33 an hour in the first example, and $6.666 in the second. The agency will also have to pay their share of FICA, workers comp, and unemployment at about 10%, reducing the amount they can compensate you by $1 and $2 an hour respectfully. The difference between the total compensation and take home here is $4.33 an hour. 4.3 weeks times 36 hours times $4.33 is $670 a month!

Any one of the factors above could be contributing to your pay difference, but it doesn't even matter which one it is. You have two quotes, pick the best one absent any other factors. A word of warning, if there is OT available and you are willing, I would not accept an overtime rate based on $10 an hour.

[ASHRN828]

NedRN, wow, thanks for your awesome reply.

The overtime point is a huge question I need to address. Is overtime mandatory with a lot of travel nursing jobs?

Also, do you have a couple of agencies you would recommend? High pay is important to me.

[NedRN]

Other than 48 hour contracts, no. Fastaff pays higher than average, but you typically earn your money on rapid response assignments. I think most of their contracts are 48 hours. Medical Staffing Solutions (the Wisconsin one) also tries to pay no less than $40 plus housing, but they are small. These are just agency mentions, not recommendations.