Negotiating a contract extension (Part 1)

During your traveling career, you will more than likely be asked to extend your contract with a facility. Sometimes your direct manager will ask you to stay onboard, or you might be notified by your recruiter. Extensions are usually offered when the facility doesn’t have any prospective permanent employees to fill the position you are covering. They may ask you to stay for a few extra weeks or for an entire year. Never feel obligated to extend if you aren't satisfied with the facility. However, if you do like the job, contract extensions are a great opportunity to renegotiate your terms.

Many of us when faced with an extension may not know that we have the ability to negotiate, so we just sign whatever our recruiter sends to us. This will typically state that you agree to the same rates as previously signed, but now the contract end date has changed. Unbeknownst to some travelers, we hold a lot of power when it comes to contract extension negotiations.

We can ask for nearly anything, and oftentimes it will be approved. We just need to know the right questions to ask. Most extensions are a win-win-win situation for everyone involved. The hospital gets to keep a trained professional on staff for longer, the agency continues to get paid without any additional effort, and the traveler gets to stay onboard and enjoy the new terms of their contract.

Pay

The first point to address with your agency during an extension is a pay raise. Agencies usually factor in a number of expenses they will accrue when they initially place you in a contract. These include recruiter hours to match a traveler with a facility, compliance tasks, blood work, physicals, TB screens, titers/vaccines, non-billable orientation hours, travel pay, etc. There are a lot of things the agency must pay for upfront before they can get you into a travel contract.

During your original contract, the agency has calculated how to recover all of those expenses and still make a profit. So when an extension is offered, the agency will now be in a position to make even more money, because their costs to place you in the job have already been covered. This is a very strong case a traveler can make when fighting for a higher pay rate during an extension. Using this tactic, you can typically increase your hourly wage by $5-10/hr.

The agency saves a tremendous amount of money during your extension simply with travel costs. Travelers typically receive $400 at the beginning and end of each contract for travel reimbursements. If you were to extend your contract, that’s $800 the agency won’t have to pay since you didn’t move from one assignment to another. That's $800/13 weeks = $61.54 per week or an extra $1.54/hour on a 40 hour week. A TB test can be $50 or more and the national average for a physical is $200. These are all costs that went into the original calculation of your first contract rate. With these costs out of the way, your agency can keep their same margins and still pay you more money.

Seasonal stipend rates

If you haven’t already, make sure your agency is paying you the maximum allowable stipends according to the GSA. Be sure to check the GSA website before an extension to see if the maximum allowable stipend has changed due to seasonal demand. Oftentimes in tourist areas, the GSA allowance can fluctuate depending on the season. Make sure you are getting the most tax-free money possible from your agency during the months you are working in that area.

Extension bonus

Some agencies may offer travelers an “extension bonus” or “completion bonus”. In my experience, these are not worth it. Bonuses are heavily taxed. You may receive a $500 or $1000 bonus during an extension, but after taxes, your net bonus will oftentimes be half of that. Instead of a bonus, ask your recruiter to blend that into your hourly rate. A $1000 bonus is an extra $2/hr over a 13-week contract at 40 hours per week.

By dispersing the bonus money into increasing your hourly rate, you will benefit more if you work additional shifts. Also the pay-raise will factor into increasing your Overtime rate. Bonuses look and sound great upfront, but are a common tactic that agencies use to expedite a traveler signing an extension. Be sure to look at all of your options and see where you can get more money during your next extension.

Next week we will share what other terms you can negotiate on your next contract extension besides money. Be sure to subscribe to our weekly email list so you can stay up to date with all of our new posts. You can also contact us with any direct questions about your contract extensions.