Overtime

Overtime is a compelling topic when it comes to travelers. Some of us want to work as much as possible during our contract and will take any overtime (OT) or holiday shifts that come our way. While others have no interest in working anything beyond our contracted time.

Whether you intend on working overtime or not, it's important to at least take a look at your contracted OT rate and confirm that it is worth your time in the event that you end up with an additional shift during your assignment. If you work an extra shift, you want to make sure that you're compensated well for it. Not all agencies default their OT rates to be fair for the traveler. Oftentimes, it will feel useless to work an extra shift if you don't establish a reasonable OT rate.

Overtime bill rate

Many agencies will calculate your OT and holiday pay rate based strictly on your taxable hourly rate. This is standard in most employment settings where overtime is equal to 1.5 times your standard hourly rate. However, as travelers we often are given a lower hourly rate when working in locations that receive a high tax-free stipend. Places like San Diego, Los Angeles, San Francisco, Boston, and Washington DC all have relatively high stipends. When your tax-free stipend is equal to over $2500/week like it might be in Boston during the springtime, your hourly may only be $20/ hour. What this means is that you will effectively be paid $3,320 for your first 40 hours worked, or $83/hr before taxes. Then anything you work after 40 hours you will only be paid time and a half based on your hourly rate of $20, with no additional stipends. Therefore, hours 41 and beyond will only pay you $30/ hour. This can feel counterintuitive when you are used to making almost three times that amount with your blended rate. This is why many travelers choose not to work any overtime.

In order to calculate a fair overtime rate, it's important to address the bill rate. The bill rate is the amount of money the agency charges the facility for you to work there. It's not uncommon for the bill rate to exceed $120/hr. In the case of the example above where the traveler makes $3320/week gross income, let's assume this is based off of a $120/hr bill rate. In other words, the agency is charging the hospital $4,800 for every 40 hours the traveler works ($120 x 40hrs). In this case, the agency is taking a 30% cut and paying the traveler nearly 70% the bill rate.

When the traveler works overtime, the agency can often charge the hospital 1.1x to 1.5x or a fixed amount (say $10-$20/hr) more than the standard bill rate. What this means is at minimum, the hospital is still charging your base bill rate of $120/hour (if not more) for any overtime hours worked. Unless an equitable OT rate is established in the contract, the traveler would only be paid $30/ hour for overtime and the agency would make $90/hr. In this scenario the agency is effectively making a 75% or more off of every overtime hour the traveler works.

Calculating a fair overtime rate

When presented with a contract, be sure to check that your OT and holiday pay rate is more than the standard 1.5x your hourly rate. To calculate a decent overtime rate, you must first determine your blended rate. The blended rate is your hourly rate multiplied by the number of contracted hours worked, plus your stipends, all divided by the total number of hours worked weekly. The formula looks something like this:

Blended rate = ((hourly rate x hours worked) + meal and housing stipends) ÷ hours worked

Your overtime rate should be more than your blended rate. Since the agency is able to pay you the blended rate, based on the standard bill rate, they should be able to pay more than the blended rate considering they can charge more than the standard bill rate for any overtime you work at the facility. Therefore, you should ask for 1.5x your blended rate for overtime when first drafting a contract with your agency. If they state that is not possible, then ask them how much more they charge on top of the bill rate for overtime/extra time hours worked. Tell them that you wish to be paid more than your blended rate for overtime.

Overtime Laws

Overtime is defined differently depending on what state you work in. Most states indicate overtime is anything worked beyond 40 hours per week. In some states like California and Nevada, overtime is anything after 8 hours per day and 40 regular hours per week. These rules typically apply to every facility in these states, unless the hospital has adopted an alternative work week. Alternative work weeks may be defined differently depending on the facility, but generally speaking it is an agreement that the worker is willing to work more than 8 hours per day and not get paid overtime. Be sure to check with state laws and the facility HR department to help clarify when your agency should pay you overtime.

Whether you plan on working overtime during your next contract or not, remember to check your OT rate before signing your next contract. Some agencies will automatically pay travelers a generous OT rate, however that is not always the case. Make sure your OT rate is worth the extra time you put on the clock.