What Is a Travel Nursing Contract?

A travel nursing contract is a fixed-term employment agreement, usually 13 weeks, that places a registered nurse at a healthcare facility away from their permanent residence. The contract is typically arranged through a staffing agency that earns a success fee, either as a flat placement charge or as a markup on the nurse's bill rate. These contracts govern compensation, housing stipends, licensing requirements, cancellation terms, and the clinical scope of the assignment.

How the Contract Is Structured

The travel nursing contract exists in three layers: the master service agreement between the healthcare facility and the staffing agency, the individual assignment contract between the agency and the nurse, and the purchase order or vendor file that the facility uses to authorize each specific placement.

The facility contract sets the bill rate, the markup range, and the terms for conversion, which is when the facility hires the nurse permanently and owes the agency a conversion fee. The nurse contract sets the pay rate, the tax treatment of stipends, the compliance documentation, and the penalties for early termination by either party.

The Money Flow

A typical travel nursing contract runs through a simple arithmetic. The facility agrees to a bill rate of $85 per hour for a registered nurse in a medical-surgical unit. The agency pays the nurse $55 per hour as taxable wages, plus a weekly housing stipend of $1,200 and a meals-and-incidentals per diem of $450. The agency retains the spread, roughly $30 per hour plus the margin on the pass-through stipends, minus payroll taxes, liability insurance, and recruitment costs.

The success fee model means the agency earns revenue only when the nurse starts the assignment and the facility accepts the timesheet. No placement, no fee. This is why travel nursing agencies invest heavily in candidate pipelines, credentialing speed, and recruiter retention.

Why the Contract Terms Matter to the Agency Owner

The contract terms determine your cash conversion cycle and your exposure to clawback. A facility contract with a 90-day guarantee period, common in the industry, means you refund the full placement fee if the nurse leaves before the guarantee expires. A contract with a 60-day net payment term means you float payroll for two months before the facility pays the invoice.

Cancellation Clauses

Cancellation clauses are the largest unpriced risk in most agency contracts. A facility may cancel a contract with 14 or 30 days' notice, often without penalty, while the nurse may face a financial penalty for early departure. The asymmetry leaves the agency holding the cost of recruitment, credentialing, and sometimes housing deposits, with no offsetting revenue.

Some agencies negotiate kill fees, which are partial payments due if the facility cancels after the nurse has committed. A kill fee of $2,000 or one week's bill rate is not uncommon in stronger bargaining positions, but many agency owners accept cancellation without penalty to win the facility relationship.

Where Agency Owners Misread the Contract

The most costly mistake is treating the housing stipend as a pure pass-through. The IRS treats tax-free housing stipends under the rules of IRC Section 162 and the accountable plan requirements. If the agency pays a stipend without a legitimate housing expense, or if the nurse maintains a tax home that does not qualify, the IRS can reclassify the stipend as taxable wages. The agency faces liability for unpaid payroll taxes, and the nurse faces an amended return.

Another common gap is failing to lock the conversion fee in the facility contract. A conversion fee of $10,000 to $15,000 is standard when a facility hires the nurse permanently before a minimum assignment period, typically 520 hours or 13 weeks. Without this clause, the facility converts the nurse at no cost, and the agency loses the ongoing markup revenue.

Credentialing and the Start Date

Agency owners also underestimate the credentialing timeline in the contract. A contract signed four weeks before the start date is not a placement until the nurse clears the facility's credentialing, which includes license verification, background checks, drug screening, and often facility-specific competencies. If the contract does not build in credentialing time, or if the agency does not pre-credential the nurse, the start date slips and the revenue clock does not start.

Related Terms in Success-Fee Staffing

A travel nursing contract sits alongside other placement structures that agency owners should distinguish precisely. Locum Tenens covers the same temporary staffing model for physicians and advanced practice providers, with different billing conventions and malpractice arrangements. Bill Rate vs Pay Rate defines the spread calculation that underlies every placement margin. Credentialing is the operational process that gates the start date and therefore the revenue recognition. Contingency Search applies the same success-fee logic to permanent executive placement rather than temporary clinical staffing. Temp-to-Perm describes the contractual pathway where a temporary assignment converts to permanent employment, often with a prorated or reduced conversion fee compared to a direct permanent placement.

If you run a travel nursing staffing firm, your growth depends on facility contract volume and nurse pipeline quality. The ROI Wire program for travel nursing agencies uses Email Correspondence, Direct Mail, and Retargeting to reach hospital staffing directors and nurse managers with the discretion these relationships require. For more terms in this division, return to the Success-Fee Staffing glossary hub.