What Travel Nurses Should Know About Paid Time Off and Vacation Benefits

Paid Time Off (PTO) and Paid Vacation Time are tricky issues when it comes to travel nursing pay packages. Some travel nursing agencies offer such benefits while others don’t. However, just as with all benefits offered as part of a travel nursing pay package, the fact that an agency offers the benefit doesn’t necessarily make their pay packages better. Moreover, there are issues unique to travel healthcare that all travelers should consider when evaluating these benefits.

Does Paid Time Off Come out of the Travel Nurse’s Rate?

As we regularly mention on this blog, nothing is free when it comes to travel nursing pay. This is because an agency has one source of revenue, the rate that they’re able to bill for the travelers’ time at the hospital. This is why you commonly hear people say, “everything comes out of the rate.”

Now, you will find many recruiters defend their “free benefits” and make it sound as though the cost of these benefits are not coming out of the rate. These recruiters aren’t lying. They just have a different understanding of the issue; one that travelers should not make the mistake of relying on.

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For example, during a discussion on this topic in a popular travel nursing forum, one recruiter had this to say about his company’s PTO policy:

I placed two nurses at the same hospital, same bill rate different units, last October. They had the exact same pay package as each other. One took a perm position after the assignment, and the other has been with me for over a year and has earned 40 hours of PTO. I paid each of them the maximum amount that I could. I can account/budget for things such as per-diem, housing, travel, etc. But I cannot individually budget for PTO as I will never know who will work one assignment for me and who will be with me for years.

The recruiter is arguing that the PTO benefit his agency offers does not come out of the rate. On the surface, this explanation seems plausible. However, it misses two key points for travelers intent on properly evaluating and comparing pay packages.

First, note how the recruiter says, “I paid each of them the maximum amount that I could.” How does he determine the “maximum amount” that he can pay? The maximum amount is most likely based on a minimum profit margin that his agency has determined they are willing to accept. They decide the minimum profit margin by analyzing their costs. PTO is a cost so it’s part of the analysis. For all intents and purposes, the agency could just as easily lower the minimum profit margin they are willing to accept and do away with their PTO benefit.

Of course, this particular recruiter’s response is, “I cannot individually budget for PTO as I will never know who will work one assignment for me and who will be with me for years.” However, the fact of the matter is that no business knows how long it’s employees will stay with them, yet all businesses budget for their PTO expenses. The recruiter may not budget for it when determining the pay rate, but rest assured it’s being budgeted for. Agencies track the results of their benefits and rely on historical data to budget. In fact, the agency’s top management most likely knows exactly how many hours of PTO get accumulated per hour worked and they most certainly consider this cost when determining how to set their maximum pay rates.

Second, notice that this recruiter is comparing two different travel nurses to prove his point. The problem is that they’re both with the same company. Therefore, this comparison only holds true for his company. Again, if you were to compare his pay rate with another company’s pay rate for the same exact assignment, you may find that the other company pays more, but does not offer the PTO benefit. Of course, you may also find that the agency with the PTO benefit pays more. This is why we always say it’s so important to compare travel healthcare compensation packages in their entirety.

Now, you maybe wondering if it’s really that important to go through the hassle of scrutinizing pay packages if all we’re talking about is a few days of PTO per year. However, each day of PTO is worth anywhere from $450 to $600 depending on the rate it’s paid at. So three days of PTO per year is worth $1,350 to $1,800. We think that amount is worth the brief amount of time it will take to investigate pay packages.

Moreover, that’s just the value of the PTO benefit. There may be many similar benefits that an agency offers in addition to a PTO benefit, all of which could potentially be lowering the agency’s pay rates in lieu of providing the benefit. Therefore, if you really want these benefits, you need to make sure that you will indeed qualify to receive them.Because if you don’t receive the benefit, then you’re essentially leaving money on the table and in the agency’s pocket.

In order to accomplish this, it’s important to have a clear understanding of the issues at play with travel nursing PTO and Vacation benefits. First, it’s important to understand the difference between PTO and paid Vacation. Second, it’s important to understand the unique circumstances that travel companies are faced with when it comes to Vacation and PTO. Third, it’s important to understand the specifics of the PTO policies for any agency you’re considering working with. Finally, it’s good to know the potential motivations driving agencies to offer PTO or paid Vacation time.

Paid Vacation VS PTO

In the permanent employment market, the distinction between paid vacation time and PTO is distinct. The traditional approach is for companies to offer both paid sick leave and paid vacation days. Many companies still do this and the policies vary from company to company. In general, an employee builds up paid sick days and paid vacation on a per hour basis. In some companies, the time can build up over the years but may be capped at a specified number of hours for each category. At other companies employees may lose their time if they don’t use it by a certain date. The main idea is that you’re only supposed to use sick days when you’re sick and vacation days when you’re taking a vacation.

The original Universal Job Application and Credential Management for travelers.

In recent years, many companies decided that they wanted to give their employees more flexibility, so they lumped paid sick days with paid vacation and called it Paid Time Off. One of the main factors driving this policy was that employers wanted to reward employees who didn’t use their sick days with the ability to have extra vacation days.

This is an important distinction, especially when it comes to travel healthcare. You see, an employee should be able to use PTO whenever they want. If you’re sick, then you’re sick and you should be able to call off from work and get paid for the time. When it comes to extended vacation, the employer may still want employees to schedule the time off, but the employer is expected to be flexible with their approvals. Otherwise, the employee could just call in sick and not be violating any policies.

Unique Circumstances for Travel Nursing Companies and PTO / Vacation

Why is this important in travel healthcare? In travel healthcare, the agency is just as much a middle-man as they are an employer. It’s true that for all intents and purposes, the traveler is the employee of the agency. However, the hospital expects the traveler to be there for all scheduled shifts. In theory, the hospital is in dire need of the healthcare professional. They would not have them there otherwise. So even sick days are frowned upon. And the hospital definitely expects to have the final say on approving any vacation time. In fact, this typically happens prior to the traveler being offered an assignment.

So as long as a hospital is given final say approving vacation time, they shouldn’t really have a problem with an agency offering paid vacation because the hospital could always deny the request. However, hospitals may not like it very much if the agencies they work with offer paid sick leave. They may view it as incentivizing their supplemental staff to call off shifts. Sad, but true.

Another unique circumstance that both agencies and travelers are faced with is the inherently short-term nature of employment engagements in travel healthcare. The standard contract is for 13 weeks. Many travel healthcare professionals want to travel and work in different parts of the country. That’s one of the main appeals of travel nursing as a career choice. The problem for most agencies is that they may not have contracts available in the locations that their travelers want to go next. This is one of the many reasons that travelers tend to work with multiple agencies.

The problem for travelers is that short-term stints hinder the ability to accumulate meaningful PTO or Vacation benefits. This is because PTO and Paid vacation benefits typically accumulate over time.

Another unique circumstance is that travelers routinely leave an agency only to return at some point in the future. Often, this happens sooner than later. For example a travel nurse may leave an agency for a contract and then return once that contract is complete. This type of intermittent employment is quite rare in the permanent employment market.

Finally, travelers tend to receive compensation packages that vary greatly from assignment to assignment. For example, the total value of compensation packages can vary based on the bill rates for the assignments in question. Or, the traveler may take company housing on one assignment and provide their own housing on another assignment. This is much different than permanent pay packages that remain relatively stable over time. Of course, the value of your paid time off is typically based on your pay rate.

Know the The Travel Nursing Company’s PTO/Vacation Policy

As a result of these unique circumstances, agencies have developed unique policies for their PTO and paid vacation benefits. Therefore, travel nurses shouldn’t assume that these benefits are going to behave the same as those provided by permanent employers.

One big difference between travel and permanent vacation and PTO benefits is that there is a blurring of the lines between PTO and Vacation in travel healthcare. You see many agencies advertise PTO but when you dive into the details of their policy, you find that it’s pretty much vacation time and not PTO. Why? Because many agencies won’t pay for sick days. As mentioned above, sick days are supposed to part of PTO. You’ll also find many agencies that only allow the PTO to be used in between assignments. Both of these policies are designed to ensure that travelers don’t miss time while on assignment.

Many agencies will not pay out for unused PTO if a traveler leaves the company. However, many agencies that employ this policy will bank the PTO so it can be used if the traveler returns to the agency for another contract.

Agencies will also utilize expiration policies that are much more strict than their permanent counterparts. For example, they may expire all accrued hours on an annual basis which effectively means that all travelers start the new year with zero accumulated hours.

Some agencies will offer PTO for doing things other than working. The most common example is to give PTO for referring travelers to the agency. Typically, the PTO is paid when the referral completes a contract and is offered in addition to the agency’s standard referral bonus.

There are some agencies that have developed entirely unique vacation programs. For example, we’ve seen agencies that award points for various actions including hours worked over the course of year. The points are given a monetary value that can be applied to the agency’s annual trip to some exotic destination. If a traveler doesn’t accumulate enough points to pay for the entire cost of the trip, then they can pay the difference and take the trip anyway.

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It’s also important to note that different agencies value their PTO in different ways. For example, an agency may value your PTO based on the total blended rate for the contract you’re working at the time you use the PTO. Others may value the PTO at only the taxable base rate for the contract you’re working.

Finally, agencies maintain policies that allow them to cancel PTO hours at their own discretion. We have a difficult time speculating on the circumstances that would lead an agency to take such an action, but the policies exist nonetheless.

What Motivates Agencies to Offer PTO and Vacation Benefits?

With that in mind, there are several motivating factors driving agencies to offer these benefits and utilize these polices. First, agencies are looking to retain travelers. Retention is a major cost cutting factor for agencies. It’s quite expensive to recruit new candidates when all the manpower and advertising costs are considered. The fact that it’s so easy for travelers to jump ship to a new agency is one of the reasons that many agencies don’t pay out their PTO benefits in cash when a traveler leaves the company.

Second, agencies are looking to attract travelers with these incentives. This is why you’ll find coordinated vacations masquerading as Vacation time. These agencies are appealing to travelers’ sense of adventure.

Finally, many agencies are motivated to provide these incentives for the simple fact that their competitors offer them as well. You see, it’s more difficult to explain why you don’t offer an incentive, than it is to explain why you do offer an incentive. This is particularly true when it comes to working with new travel healthcare candidates. Seasoned pros tend to understand the travel compensation game quite a bit better and have an easier time evaluating pay packages and understanding the nuances.

Newcomers on the other hand are understandably perplexed by the compensation packages. And because a significant percentage of travelers engage in travel healthcare for a short period of time, there are a lot of newcomers. So agencies must design their programs to be newcomer friendly.

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In any case, the most important thing to remember is that you must evaluate compensation packages in their entirety in order to determine how competitive an offer is. Be sure to scrutinize PTO and Vacation policies to make sure you’ll even qualify to receive the benefits. In the end, you may find that you’re simply taking less money now in order to have a chance at obtaining a future PTO benefit. As a result, you’ll run the risk of not receiving the money at all.

As always, we’d love hear your questions, comments and experiences with this topic. Please post in the comments section below!