5 Reasons Travel Nursing Pay Quotes Can Be Wrong
Pay is among the most important variables that travel nurses must consider when determining whether or not to accept an assignment. In fact, travel nursing pay quotes are routinely requested and provided prior to the traveler being submitted for consideration to an open assignment. Unfortunately, these quotes end up being wrong more often than both recruiters and travelers would like. In this blog post, we’ll provide some background and offer 5 reasons that these mistakes occur.
Pressure cooked travel nursing pay quotes
Different agencies handle compensation packages in different ways. At most agencies, the recruiter generates the pay package. In this case, the agency may require that all compensation packages be negotiated at or above a certain profit margin and recruiters must seek approval to negotiate rates below the base profit margin. At other agencies, recruiters may not be involved in generating compensation packages. In this case, compensation packages will be generated by a supervisor or manager. In any case, mistakes can and do happen.
As mentioned above, compensation quotes are routinely requested and provided for travel nursing jobs prior to the traveler being submitted for consideration. This is an interesting occurrence for several reasons. First, it’s much more prevalent in the travel job market than it is in the permanent job market. It’s actually quite rare for hospitals to advertise the exact pay for a job opening or for a nurse to require knowing it prior to applying for the job.
Second, a travel nurse’s negotiating power increases after they have received an offer so you’d think that travelers would prefer to negotiate pay as a final step. Once an offer is made, agencies feel a sense of urgency to do whatever they can to get the offer accepted. Not only can they taste the money, but they want to deliver for their client hospital. Their feet are against the fire which is perhaps the biggest reason why agencies negotiate pay prior to submitting candidates in the first place. In fact, many agencies require their recruiters to do so.
But doing so leads to the third reason that pre-submission pay quotes are an interesting occurrence. Travel nursing recruiters often lack all the necessary details to provide an accurate quote on the spot. Agencies typically work with hundreds of client hospitals in hundreds of different locations. Keeping track of all the factors that affect pay for every single one is a daunting task. So certain details routinely fall through the cracks.
Meanwhile, the recruiter is under the gun to get the candidate submitted ASAP because there is so much competition within and between agencies for every open job order. Moreover, submissions are one variable by which a travel nurse recruiter’s job performance is measured. So recruiters may succumb to the pressure and provide a quote without all the required variables. Or, they may have all the variables, but there may have been changes that are unbeknownst to the recruiter.
Ultimately, this all leads to a higher incidence of pay quote inaccuracy than both recruiters or travelers are comfortable with. To be clear, we’re not referring to miscommunication here. We’ve discussed how to properly communicate regarding travel nursing pay in a previous blog post. Instead, we’re referring to flat-out mistakes. With that in mind, let’s take a look at 5 reasons that pay quotes can be wrong.
Underestimated Travel Nurse Housing Costs
One of the most common variables for recruiters to be without when quoting a pay package is the cost of housing. Again, agencies have contracts in hundreds of housing markets, so being an expert in every one of them is typically not possible. Instead, the agency may have worked with a particular housing provider in the past which will give the recruiter an idea of what it might cost. Or, the recruiter may surf the internet for some online rental quotes to get a basic idea of what housing might cost.
There are other housing variables that must be considered as well. How much will furnishings cost? How much will utilities cost? Will there be a premium on the quoted rental price for a short term lease? And there are many other considerations.
As a result, recruiters often make a best-guess when calculating the cost of housing. They also have an incentive to underestimate the costs because overestimating will reduce the pay quote they provide and make the compensation package less attractive. In any case, when housing costs are miscalculated, the pay quote inaccuracy can be quite large. In fact, it could come out to $1000 to $1500 over the course of a 13 week contract. That’s equivalent to $2 to $3 per hour in pay.
Travelers might be wondering why recruiters just don’t obtain the exact housing details prior to providing the pay quote. Practically speaking, recruiters just don’t have time to do that. Finding the exact housing location for an assignment is typically a very lengthy process and recruiters are providing multiple compensation quotes per day. Moreover, the property they find now may not even be available by the time everything comes together for the assignment.
It’s important to note that larger agencies often have an easier time with this aspect of pay quotes. This is because they often have housing agreements with large apartment complex managers throughout the nation, so they have a better idea of what they can expect to pay for housing. Moreover, larger agencies are more likely to have recently placed a traveler in the market because they place more travelers overall.
Underestimated Taxes
Underestimating tax burdens is another way that pay can be quoted incorrectly. There are two scenarios that typically cause problems. First, the recruiter may underestimate the tax burden when quoting net pay. In case you’re unfamiliar, net pay is the pay you receive after taxes are deducted from your pay check. Here again, it’s extremely rare to require an employer to quote net pay when seeking a permanent job, but it is common practice in the travel healthcare industry.
Mistakes calculating net pay are typically due to estimating the anticipated tax burden. Doing so is unwise. Tax rates vary widely between states. Moreover, it’s difficult to remember where the various marginal tax rate cutoffs are for federal taxes. As a result, miscalculations can ultimately lead to discrepancies of $100 per week or more. That’s a lot of money over a 13 week contract!
The good news is that estimating travel nursing net pay is fairly simple with the help of online paycheck calculators. Simply enter the pay variables the calculator asks for, and it will estimate your net pay.
The other scenario isn’t so simple to overcome. You see, each state has different Workers Comp, Disability, and Unemployment Insurance tax rates that employers must pay. If an agency hasn’t staffed in a particular state for a while, then they may not have these rates updated or not even them at all. The recruiter may overlook this variable when running rate calculations and quote a rate that is higher than it should be.
In this case, the agency’s costs will end up being higher than anticipated when the pay quote was calculated. As a result, they won’t have as much money to pay for the contract as they thought they would.
Non Billable Hours Not Calculated
Many travelers are unaware that in many cases agencies are not allowed to bill for a certain number hours while the traveler is actually working. These hours are commonly referred to as “Non Billable.” Non billable hours vary from hospital to hospital. I’ve seen them as low as 4 hours and as high as 16 hours.
To top it off, travelers may also have to complete a bunch of pre-orientation paperwork that is specific to the hospital. We’re not talking about the standard testing and documentation typically required for JCAHO. Instead, this documentation is specific to something at the hospital, such as hospital protocol testing or training modules. Here again, hospitals typically do not allow agencies to bill them for this time, so if the agency has a policy to pay the traveler for it, then they must ensure that the cost is factored into the pay quote. Otherwise, the quote may end up too high.
Of course, you’re probably wondering how these variables can be overlooked. For starters, these factors vary so much that they may get lost in the shuffle among all the other variables the recruiter must keep track of. Or, they may have changed unbeknownst to the recruiter. Finally, many agencies use pay calculation software typically referred to as “Rate Sheets.” Rate sheets typically include all of the cost variables for the particular assignment they are attached to. Sometimes, the non-billable hours may not be included. In any case, the recruiter may not discover the non-billable hours until after the quote was provided.
Incorrect Bill Rate
The bill rate is the hourly rate that agencies are able to charge for the traveler’s time on the job. It’s the fundamental basis for the pay rate on any given assignment. And sometimes, the wrong bill rate may be used to calculate the pay for a given assignment.
Here again, if the agency uses rate sheet software, then the bill rate may be entered incorrectly in the database. Or, the bill rate may have changed for the hospital in question unbeknownst to the recruiter calculating the rate. It’s also possible that the rate used to calculate the pay was for the wrong specialty as rates vary by specialty.
Time Discrepancies
Finally, pay may be misquoted if the time variables used in the calculation are incorrect. Time has a huge impact on the compensation package. For example, the more hours that are worked, the more money the agency is able to bill for. As the agency bills for more money, fixed costs like housing, travel and medical benefits become a smaller percentage of the overall pay package. This frees up more money to pay the traveler.
If a recruiter runs a rate for 13 week contract and the contract is only 8 weeks, then the pay will be quoted too high. Similarly, if the traveler plans to schedule time-off during the course of the contract and doesn’t let the recruiter know prior to obtaining the quote, then the rate could be misquoted. This is one of the main reasons that recruiters ask about scheduled time-off prior to running rates for assignments.
Basing the pay quote on the incorrect schedule can also cause errors. For example, if the assignment is for 5 8 hour shifts per week and the calculation is based on 3 12 hour shifts, then the pay will be quoted incorrectly. Similarly, if the assignment doesn’t allow extra billing for overtime hours and the rate is calculated as if it does, then the pay will be quoted incorrectly.
What happens now?
Travelers may look at these “”5 Reasons” and prefer to call them “5 Excuses.” That’s a fair criticism. Agencies should be able to get their pay quotes correct and they are indeed correct in the vast majority of cases. But what happens they’re incorrect?
The main question travelers probably have has to do with how agencies handle these mistakes when they occur. Unfortunately, there is no cut-and-dry answer to this question. Different agencies will handle it in different ways and it will probably even vary within the same agency depending how big the error is.
In the majority of cases, these issues are brought to light prior to the contract being signed and after the offer has been extended. This is because the rate sheet for the assignment will be scrutinized more closely prior to sending the contract to the traveler and the contract won’t be sent until the offer is made. And in the case of housing costs, the agency may not know what they’ll be spending until after they actually search for housing options.
In these cases, if the agency doesn’t honor the original quote, then there will be some renegotiating that takes place. Again, it’s important for travelers to remember that they’ll have increased leverage in cases where the offer has already been extended.
However, in the case of net pay quote errors, travelers won’t find out until after they receive their first paycheck. This can be a sticky situation. It’s important for travelers to remember that any “Net Pay” is just an estimate. Moreover, the net pay is not included in the contract so holding the agency accountable is a bit more difficult. However, the estimates should at least be in the ball park. In any case, most agencies should be able to arrive at an agreement with the traveler that is amenable to both parties.
In some cases, the agency will discover a substantial error after the contract starts. For example, the agency may find out that the bill rate they entered for the job is incorrect when they send a bill to the hospital and it gets returned for the incorrect bill rate. In these cases, the agency should honor the contract. And luckily for the traveler, they’ll have the contract to rely on in case there is a dispute.
As always, we’d love to hear about any experiences you’ve had with this subject by posting in the comments below!
