What You Ought To Know About Verbal Travel Nursing Contracts
Contracts are one of the cornerstones of travel nursing. But different agencies approach travel nursing contracts in different ways. In fact, it’s even possible that different recruiters within the same agency approach contracts in different ways. Specifically, some agencies and recruiters will consider a contract to be binding with a verbal agreement while other agencies and recruiters will consider the contract binding only if they receive a signed contract. In this blog post, we’ll discuss some of the issues surrounding verbal travel nursing contracts.
Why do some agencies rely on verbal travel nursing contracts?
First, it’s important to provide some perspective. When a recruiter receives the official job offer from the hospital, the agency is on the clock to confirm or decline the offer. The time-frame, or deadline, for the confirmation is not set in stone, but it’s fairly standard for hospitals to expect an answer within 24 to 48 hours of the offer. Ultimately, hospitals want to know as soon as possible if the offer is being accepted. If it isn’t accepted, then the hospital must move on with other candidates which can be time consuming.
At the same time, the agency really wants to lock the offer down. When the offer is made, the money is so close that the agency can taste it. Additionally, the agency wants to ensure that not a moment is wasted in securing all the required documentation and making all the necessary arrangements. And they’re not going to start this process until the offer has been accepted.
As a result many agencies press their recruiters to obtain a verbal agreement from the traveler to accept the assignment. They feel that waiting for a contract to be signed and returned will take too long. We’ve also heard that some agencies have a bloated contract process that causes lengthy delays in generating contracts and getting them into the hands of travelers.
Additionally, many agencies and recruiters believe that obtaining a verbal agreement is much easier than obtaining the signed contract. Recruiters can address any concerns the traveler may have over the phone and persuade the traveler to accept the offer. If the traveler is left to review the contract on their own, then questions may develop about the contract’s legalese or doubts may arise that the recruiter cannot address immediately.
How do verbal travel nursing contracts happen?
In a typical verbal contract scenario, the recruiter will receive an offer from the hospital after the traveler has interviewed for the assignment. The recruiter will then call the traveler to inform them that the offer has been received. The recruiter will then seek to obtain a verbal agreement from the traveler to accept the offer. Often times, the recruiter will inform the traveler that they are entering into a binding verbal contract for the assignment which is enforceable under law.
The recruiter will then send a Confirmation to the hospital. The Confirmation is in essence a contract between the hospital and the agency. The confirmation includes the basic provisions for the particular assignment including the traveler’s name and basic information, the unit to be worked, the time periods, and any special agreements like approved time-off. So at this point, the agency is locked in to a contract with the hospital.
The recruiter will also initiate the onboarding process. This means that they’ll start the credentialing process and begin securing provisions like housing and travel arrangements. Of course, part of this process will be to draft a written contract and send it to the traveler for signature.
In most cases, there are no problems with verbal contracts. Everything proceeds according to design. However, sometimes the traveler has second thoughts about whether or not they want to accept the assignment. Of course, when the traveler voices their concerns to the recruiter, the recruiter will most often claim that the traveler has entered into a legally binding verbal contract and may be subject to penalties if they don’t accept the assignment. Nearly every traveler in this situation naturally wonders if this is true.
Are verbal travel nursing contracts legally binding?
DISCLAIMER: We are not lawyers and are not providing legal advice. The information in this article is intended for informational purposes only. You must seek legal advice regarding the circumstances of your unique situation.
The simple answer is yes, verbal contracts are indeed legally binding. However, it’s much more complicated than this. Perhaps the most common statement that legal experts make regarding verbal contracts is that the existence of verbal contracts is extremely difficult to prove in a court of law. Unfortunately, if you agreed to a contract, then you agreed to a contract. In other words, you probably don’t want to lie about it, especially in a court of law.
But there is a more important issue to consider when it comes to verbal travel nursing contracts. Exactly what has been agreed to? Why does this matter? Well, according to The Law Offices of Stimmel, Stimmel and Smith, there are four basic requirements to create an enforceable agreement. One of those requirements is that the essential terms of the contract between the parties must be agreed upon by both parties. According to them:
If the parties failed to agree on these key terms, or on only one or two of them, the court will usually void the attempted agreement on the grounds of uncertainty or a failure of the parties to have “a meeting of the minds.”
This is important because there are many key terms involved with a travel nursing contract. It’s certainly possible that the recruiter does an excellent job and covers all of them in clear enough detail to suffice a court. However, there is a good chance that some terms don’t get covered or some terms even change. Of course, each case will be different so it’s up to you to determine your own best course of action.
What are the consequences of breaking a verbal travel nursing contract?
Financial Consequences
Of course, weighing the consequences of breaking a verbal contract will undoubtedly be part of your decision making process. There are several potential consequences to consider. First, the agency could potentially be penalized by the hospital for the contract being broken. These penalties typically range between 1 to 2 weeks’ worth of billing for the assignment in question.
Second, the agency may have spent money on getting everything together for the contract. They may have secured housing already. Or, they may have paid for medical screening or other credentialing items. In either case, the agency could be out a substantial amount of money for these items.
Both of these consequences typically depend on the amount of time that has passed between the verbal agreement and when the traveler lets the agency know that they intend to decline the offer. The longer the period of time, the greater the likelihood that the agency has accumulated expenses and the greater the likelihood that the contract penalty clause has come into effect.
A third potential financial consequence involves a penalty to be paid by the traveler. Many, if not most, contracts include a cancellation penalty or fee that kicks in if the traveler cancels the contract without cause. Often times, these cancellation fees are intended to cover the costs described above, but sometimes they represent an additional cost.
In any case, the big question is whether or not the agency will take legal action against the traveler if the verbal contract is broken. It’s not legal for agencies to just penalize pay or send the traveler a bill for damages. Instead, they must take the matter to court and seek a judgement.
Given the shaky ground on which verbal contracts stand, it’s highly unlikely that an agency would take legal action. The risk is too high for the minimal reward. On a personal note, my old agency never took action in cases where contracts were broken and we never relied on verbal agreements. However, this doesn’t mean that agencies never take action.
Non-financial Consequences
Of course, there are other consequences for travelers to consider that aren’t necessarily financial consequences. First, you will hear agencies claim that cancelling verbal contracts can ultimately affect patient care at the hospital. Hospitals are counting on travelers to meet their staffing demands. If they’re not able to find a replacement on time, then they’ll be short-staffed.
However, this depends largely on the amount of time that has passed between the verbal agreement and the cancellation. For example, if only 1 day has passed since the verbal agreement, then the situation isn’t much different than it would have been had the traveler declined the offer at the outset. But if several days or weeks have passed, then hospital will need to start from scratch to find a replacement.
Second, travelers must consider their reputation with the hospital, the agency, and within the industry. It’s rare for hospitals to DNU a traveler for cancelling a contract prior to start, but the likelihood increases the closer the cancellation is to the start date.
The agency will certainly be upset. Here again though, it’s rare for an agency to DNU a traveler for backing out of a contract, but the likelihood increases the closer the cancellation is to the start date. Moreover, if a traveler is DNU’d from one of the larger agencies, like AMN, then it can affect their ability to get assignments at any hospital where the agency in question serves as the Managed Service Provider (MSP). For example, AMN is the MSP for Kaiser in California. So, if you are DNU with AMN, then you will not be able to work a Kaiser contract, even through another agency.
Finally, your reputation could be damaged within the industry. Healthcare staffing agencies do indeed communicate with one another. They call for reference checks and communicate about other matters. If word gets around that a traveler has a tendency to back out on contracts, verbal or otherwise, then agencies may be hesitant to work with them.
Are verbal contracts a good idea?
Considerations for Travelers
In our view, verbal contracts are a bad idea for both agencies and travelers. From the traveler’s perspective, it’s much better to review the written contract before agreeing to anything. Again, there are many different provisions to consider and provisions can vary from assignment to assignment even with the same agency. For example, shift cancellation policies vary by hospital, so different contracts can have different shift cancellation policies. The simple solution for travelers is to demand the written contract before agreeing to anything.
Considerations for Agencies
From the agency’s perspective, it’s certainly better to have a signed contract than it is to have a verbal agreement. Again, verbal agreements are on shaky ground and legal experts agree that they’re extremely difficult to enforce.
On another note, agencies surveyed by Healthcare Traveler Magazine reported contract cancellation rates of between 5% and 20% depending on the agency. And we’re willing to wager that agencies relying on verbal contracts experience much higher cancellations rates than those that rely only on written contracts.
The risk for agencies simply isn’t worth the trouble. If an agency is intent on getting offers accepted quickly, then there are procedures and tools that can help achieve desirable outcomes. First, recruiters should be trained to discuss all contract provisions in advance. This ensures that there are no surprises on the traveler’s end when the written contract is received. Agencies may even go so far as to have recruiters send candidates a sample contract to discuss.
Second, procedures can be instituted that require recruiters to drop all issues when an offer is received in order to generate the contract, send it, and call the traveler immediately upon doing so. The contract can be discussed over the phone, signed and returned in the same amount of time as a verbal agreement. Agencies can even employ the use of electronic signature software like DocuSign to speed up the process.
I’m certain that these procedures will work. They’re the same procedures I used while working my way to 42 travelers on contract. That’s a number that ANY agency would be happy with. More importantly, the agency will be providing a much better service to both their travelers and client hospitals.
Agencies should want travelers to review contracts before accepting them. Ensuring that the traveler understands everything in the contract is simply good business. Moreover, when travelers learn about items in a contract that they were unaware of prior to agreeing to accept the assignment, it gives the impression that the agency is duplicitous. No agency wants that. Besides, you’re going to be sending the contract at some point anyway…better sooner than later.
