Completion Bonuses

NedRN · Mar 18, 2016

Large bonuses like that are almost always pass-through bonuses paid by the hospital after the assignment is over. That is a significant amount of money if the rest of your compensation is market rate - about $10 an hour.

There are some issues with pass-through bonuses you need to understand that your agency (almost certainly) did not tell you about. For starters, it represents both reward and significant risk. If you fail to complete your assignment for any reason, you lost that $10 on hours worked. In the past, notably in Arizona when the hospital association engaged in price fixing resulting in below market rates, hospitals were not able to attract quality travelers and started offering large completion bonuses to bring the effective pay back to market rates. Fine and good, until some bad actor hospitals discovered that they could cancel travelers on week 13 and not pay it. That gave completion bonuses a bad name and many travelers from that era will not accept them at all.

There are several ways to mitigate this risk. One is by understanding the risk and possibly choosing a different assignment without that risk. Another way is asking the agency to roll the completion bonus into your hourly pay. They will be very reluctant to do so because now they are assuming that $10 an hour risk if the assignment fails to complete for any reason. I know travelers and agencies that have done so, but only because the agency had worked with the traveler before and there was a high degree of trust. Yet one more way that has a higher probability of success is to ask for the bonus to be paid in proportional chunks every four weeks (ideal would be weekly of course). The agency would have to get the hospital to agree, but that should not be hard. You will still be chasing that carrot for the whole assignment so the incentive is still there for you and the hospital.

The last thing is taxation. When you get the check, it will be much smaller than you expect and generally the reason is not explained to you ahead of time, and not even spelled out in your contract. This causes a lot of friction between the agency and traveler. It is not that bonuses are taxed higher per se. It is because your agency cannot pay you that bonus legally without withholding taxes, including so-called payroll taxes. That includes the normally invisible employer share of payroll taxes including FICA, unemployment, and workers compensation. These taxes cost the employer about 10% of gross payroll. If the agency did not deduct it before the normal withholding taxes, they would lose money on the "pass-through" bonus. Thus your paystub will likely show a $4,500 dollar bonus, not $5,000. You can see why this would lead to hard feelings, especially if they take an even bigger cut from the bonus so they can have a profit margin from that "revenue" (which is really unfair).

I can picture a scenario where the agency does pass along the full bonus, but if you understand the above, you will understand that you are still paying that $500, it is just invisible to you because the agency lowered your pay by $1 an hour for this assignment.

Knowledge is power, so you now what is the right move for you. Large pass-through bonuses can really increase you pay, but only if you understand them and are signed up with several agencies so you know what market rate really is. For in-demand specialties right now, there are usually very high hourly bill rates. So you should be able to shop for high paying assignments and discover some that pay total compensation without the risk of a completion bonus.

Just to complete a discussion of completion bonuses, a low completion bonus on the order of $500 to $1,500 is almost always just your agency slicing up your compensation differently. While it might be appealing to have a large chunk of money as a parting gift (not unlike many hourly workers who deliberately under claim dependents to get a large tax refund check), it is an unnecessary risk. Always ask your agency to roll it into your hourly. Why should your misfortune at not being able to complete your assignment benefit the agency?

Other than discussed above about the special situation with pass-through bonuses, total annual taxes will be exactly the same. Yes, a large check may result in a higher income tax bracket that week increasing the percentage of taxes that week, but at the end of the year the total taxes paid after refund or payment will be exactly the same.

guest769224 · Mar 18, 2016

Yet one more way that has a higher probability of success is to ask for the bonus to be paid in proportional chunks every four weeks (ideal would be weekly of course). The agency would have to get the hospital to agree, but that should not be hard.

What rationale would the traveler use to justify this request to their agency and/or hospital? Can you flat out say, "I worry the hospital won't hold up their end of the bargain."?

How common are these completion bonuses?

RNAvatar · Mar 18, 2016

Wow! Great info! From what little information that I have read, many are against it because they say that the hospital can just fire you a week before your contract ends so that you won't be able to get that bonus. Great tip on adding the bonus into the hourly pay, but I'm not sure if my recruiter would do that for me as this would be my first assignment. I'm leaning towards a higher paying location, rather than the lower paying location with the added completion bonus. I think it's just too big of a risk for me, and I certainly do not want a hospital terminating me just so they don't have to pay me my bonus. Plus, if a hospital offers a completion bonus to attract travelers, I'm not sure if it would be a good idea to work that particular hospital?? That part kind of scares me too..

NedRN · Mar 18, 2016

There is no cost to asking. Zero.

As far as a high paying assignment goes, there is always the question of why? Is it supply and demand, or is it because experienced or competent travelers won't work there for less?

NedRN · Mar 18, 2016

What rationale would the traveler use to justify this request to their agency and/or hospital? Can you flat out say, "I worry the hospital won't hold up their end of the bargain."?

Simple. Just tell them the risk is unacceptable. If I catch flu week 12, I've lost $10 an hour for 11 weeks.

How common are these completion bonuses?

Historically, or now? Agency completion bonuses or hospital "pass-through" bonuses?

In short, agency bonuses are dead common for marketing reasons. People like the idea of bonuses, even though it is just organizing your pay differently for no real benefit (other than to keep you motivated to complete your assignment as you should contractually and professionally). Hospital pass-through bonuses are also there to make your pay appear to be better, or so the base bill rate does not change because of what is perceived as a short fluctuation in supply and demand. Some hospitals are rightly believing that agencies are profiting unduly from high bill rates, and are trying to pay the traveler more to get better travelers (or any at all in some cases).

Remember the law? Supply and demand is the law, everything else is just marketing.