Breakdown of Travel Contract Pay

Below we’ll go over all the payments listed in your contract and we want to give you all the scoop from across the travel world ether of do’s and don’ts. 

Many of the things being recommended in the travel therapy (and nursing) world are not explicitly listed in a tax code (we will tell you if they are), but rather some of the ‘warnings’ come about because of travelers who have been audited and found lacking in some area or via tax professional recommendations.

So just know that many things are not hard and fast rules, but if you want to avoid an audit it’s best to be on the safe side.

Contract Breakdown

All of these rates listed below are things you should verify/check/look into BEFORE signing your contract. 

If you look at the breakdown of your contract you will see several numbers, as shown below from one of our contracts:

Snapshot of travel contract pay

Regular Pay Rate

This is your hourly rate. On travel contracts this is going to be lower than you’d get with perm contracts because of the added pay of stipends making up the rest of your check. 

The general rule for hourly pay rates are to keep them $20+/hour, however you want to be sure you are maxing out your stipend rate first because this is untaxed money. We have seen it recommended to go as low as $18/hr, however you are holding an advanced degree and it has been suggested that getting paid too little may be a red flag for auditors. 

You want the Regular Pay Rate number to be low so you can remain in a lower tax bracket and pay less taxes, however keep in mind that stipends have a capped amount regulated by the government, so an increase in regular pay rate is typically the way you get pay increases. 

So let’s say you intend on extending a contract and you ask for an increase in pay prior to confirming that extension - it will likely be increased by increasing your Regular Pay Rate. 

Yeah, you’ll pay a little more in taxes but mo’ money is mo’ money. 

Overtime Rate

The overtime rate on travel contracts can be tricky. When asking about the low rate of overtime on contracts, we have had recruiters tell us that we will not be required or even asked to do overtime. However, on 100% of our contracts we have done overtime. On our first contract we didn’t know all of what to look for and our overtime rate was only $38/hr and we did a good amount of overtime. 

So let this be a lesson to you - make sure your overtime rate is worth it!

Most of the time, the overtime rate given to you initially will be your Regular Pay Rate x1.5 - which is how it is done in “the real world”, but our Regular Pay Rates are typically lower than we’d get at a perm job, so you have to ask for a blended Overtime Rate.

This means your overall pay (Regular Pay Rate + Stipends) is taken into account for overtime and it hurts a little less to do overtime. 

In the contract example above, if we didn’t ask for an increased Overtime Rate we’d be getting paid $30/hr x 1.5, and at only $45/hr, this is often less than what a perm position is paying - and that’s for OVERTIME. You don’t want that as a traveler, you want it to reflect your overall pay.

Typically we recommend you ask for $60-$70/hr for your overtime, we even had a contract that was $90/hr for overtime. If a recruiter tells you it’s not possible, it is and you need to push for it.

We like helping out as travelers and we like being invested enough in each location to want to do overtime and support the company - and it feels a lot better if you’re getting paid well for it too. 

Holiday Rate

If you work any holidays while on contract, this will be the rate for those days only. It’s not the same as the Overtime Rate because likely this will just be another day in your work week and you are still getting your stipends. 

We haven’t seen many recommendations for this, but for us, having it be $45-$50/hr minimum is good for working on a holiday.

Each contract you work will have different paid holidays and your contracting company may have different ones too. Verify with your current location and with your contracting company which dates to expect the Holiday Rate. 

Then for the paycheck that’s after that holiday you’ve worked, be sure to check your pay stub for your holiday pay rate for that day. It often gets overlooked. 

Stipends

Stipends are broken down into two categories: Housing Allowance & Meals and Incidentals Allowance. These rates are regulated by the government and they change each fiscal year, which means they are updated in October each year. 

To check if you are getting the max number of stipends allowed, simply google “GSA rates” and then enter the zip code or town that you will be in. The GSA rates for Housing and Meals/Incidentals are listed in daily amounts, so you will multiply those numbers by 7 and see if the calculations you are getting match with what is listed in your contract.

Most of the time the company will give you max stipends, however there is a reason a company would not be able to give you the full rate: the money paid by the facility doesn’t cover it.

Here’s a quick example:

Let’s say the facility is paying the contracting company $75/hr for you to fill the position. Right off the top, you’ll have the contracting company’s cut taken for their fees, typically between 20-30%.

Let’s call it 25%, and 25% of $75 is about $19. So now you’re working with $75-$19=$56/hr

If you’re getting paid $20/hr for your Regular Pay Rate (and we said above that’s the lowest rate that may not be a complete red flag for an audit) then you’ll subtract that from the $56/hr.

So now you’ve got $56-$20=$36/hr - that’s the possible amount that your stipends can come from. If you’re doing 40hrs per week at $36/hr that’s $1,440 in possible stipends per week. 

And for example, if your contract was in Sacramento, CA, your total possible combined Housing Allowance and Meals/Incidentals GSA rate would be $1652 - this is found on the GSA website. 

So if all your contracting company has left is $1,440 to give you for stipends, then you wouldn’t be getting the max amount of $1652 because it’s just not there. 

If you have a very low Regular Pay Rate of $20/hr, then you can’t go any lower in order to add that money over to the stipends. But if your Regular Pay Rate is higher than this, you do have the power to negotiate higher/maximum stipends. 

Ultimately it’s better to have the money in stipends because it’s tax free and so you keep more of your money. We love that for you! 

Bonus!

A bonus bit of info. We mentioned earlier that the GSA rates for Housing Allowance and Meals/Incidentals are updated sometime in October each year. If you have a contract that ends in October and you are considering extending, you can negotiate a higher rate for that extension simply by asking for the updated higher stipends. 

It’s possible they say the money isn’t there, but that’s always a possibility!

We understand it’s a hard line to ride, with asking for increased pay and not wanting to seem too greedy, but it gets easier to ask for things and know what to push for and when to take what’s on the table. 

Any questions about your contract pay? Reach out and ask us about your specific situation!