Comparing locum offers by net pay
A higher hourly rate can pay less once you count what the offer leaves you to cover. Here is how to put offers on the same footing.
Short answer
How do I compare locum offers with travel and housing?
Compare what each offer pays per hour after the costs it leaves to you. Add up everything it pays, subtract the travel, lodging, rental car, meals and malpractice you would pay yourself, and divide by the hours you would work.
Work out net pay per hour
Use the same steps for every offer, over the whole block of dates it covers:
- Gross pay. The rate times the hours, shifts or days, plus call or overtime pay, plus any bonus or travel and housing stipend paid to you.
- Out of pocket. Each cost the offer doesn't cover: getting there and back, lodging for every night of the block, a rental car if you fly, meals, and malpractice coverage if the offer doesn't include it.
- Net pay. Gross pay minus out of pocket.
- Net per hour. Net pay divided by the hours you would work, call hours included.
Rates quoted per shift or per day don't compare directly with hourly rates, and neither do blocks of different lengths. Net per hour does. Net pay per day away from home is a useful second measure when one offer keeps you away longer for the same hours.
Costs an offer may leave to you
Offers differ most in what they cover. Ask each agency or facility in writing whether it pays for travel, housing and a rental car, and whether it provides malpractice coverage, including tail coverage after the assignment ends.
Where you pay yourself, use a real quote or what you actually spent on past assignments. For meals, the federal M&IE rate for the location is a neutral yardstick, and for driving, the IRS standard mileage rate is a reasonable cost per mile. A new state license and credentialing also take money and time, so note them when an offer is in a state where you aren't licensed yet.
Stipends and taxes
Net pay here is before income tax, so it compares offers on the same footing without guessing your tax bill. In Shyft, state income tax is flagged, not deducted. Two things can still change what you keep:
- State income tax. Some states don't tax wages, and work in another state can mean filing there. Compare offers in different states with that in mind.
- Stipends. If you are an independent contractor and don't account to the client for the costs a travel or housing allowance covers, IRS Publication 463 says you must include the allowance in your income.
In the app
How Shyft helps
Shyft does this math for the offers you enter.
- Compares your offers side by side by net pay per hour.
- Estimates unpaid costs and shows where each one came from.
- Marks the best net rate and flags conflicts with your calendar.
- Drafts the assignment and its shifts when you accept.
Shyft is in beta for Android phones.
More questions
Is a housing stipend taxable for a locum contractor?
If you are an independent contractor and don't give the client an adequate accounting of the costs a travel or housing allowance covers, the IRS says you must include the allowance in your income. Whether you can then deduct the lodging depends on whether you are traveling away from your tax home, so confirm with a tax professional.
Should I compare locum offers by hourly rate?
Not on its own. Two offers with the same hourly rate can pay very differently once you count unpaid travel, lodging, a rental car, meals and malpractice, so compare net pay per hour instead.
How do I compare a per-shift or per-day rate with an hourly rate?
Turn every offer into total pay for the block, subtract the costs you would pay, and divide by the hours you would work. The result, net pay per hour, compares directly across hourly, per-shift and per-day rates.
What does net pay per hour leave out?
Income tax, because it depends on your whole year rather than one offer. It also leaves out costs you didn't enter, such as a new state license, so note those separately.
Sources
- Publication 463, chapter 6: Rules for independent contractors and clientsIRS: when a reimbursement or allowance must be included in income.
- Per diem ratesGSA: the lodging and M&IE rate for any US city.
- Standard mileage ratesIRS: the business rate per mile.
This guide is general information about US federal tax rules, not tax advice. Rules change and depend on your situation; confirm with a tax professional before you file. Shyft's offer comparison is an estimate for planning only.