Today, I’m diving into the world of sign-on bonuses that employers offer to recruit nurses and APRNs. 

Are they really as good as they seem? We’ll explore the good, the bad, and the ugly truths about these bonuses. 

But first, let’s take a step back and talk about what exactly a sign-on bonus is for those of you who might not know.

What is a Sign on Bonus

So, a sign-on bonus is essentially a one-time lump sum payment that an employer gives you after you agree to join their company.

This bonus is designed to attract new employees and incentivize them to apply for a job and accept a job offer if given. 

Employers use sign-on bonuses to make their job offers more appealing, especially in competitive job markets where skilled professionals like nurses and APRNs are in high demand.

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How Much Are the Typical Sign-On Bonus?

Now, of course, given the explanation I just gave you, you’re probably wondering, “How much are these sign-on bonuses?” 

The truth is, it varies. 

From my experience and research, for nurses and nurse practitioners, it’s usually around a couple of thousand dollars to about $10,000.

This range can depend on various factors, such as the demand for the position and the specific employer’s budget.

I’m sure somebody is going to throw in the comments about how they know someone or themselves got a really huge amount.

And, you know, that’s great if you’re able to negotiate that. But the average seems to be about $2,000 to $10,000.

Of course, some people get far more than that, and that’s fantastic for them.

However, it’s important to note that not all positions offer any type of sign-on bonuses.

This means that while the potential for a substantial bonus does exist, it isn’t guaranteed across all nursing and APRN positions.

The Good Things About Sign-on Bonuses

So now you know what a sign on bonus is, let’s now talk about some good things about it.

1. The Extra Money

Let’s start with probably the most obvious benefit of a sign-on bonus, the extra money. 

On top of your regular salary or hourly pay, you get an additional lump sum. 

For example, if you normally earn $50 an hour and you agree to a $10,000 sign-on bonus, you still get your $50 an hour. 

Assuming you work a normal full-time shift for the year, which is 2080 hours, that would add up to roughly $104,000 annually. With the $10,000 sign-on bonus, you now have $114,000 for the year.

2. It Could Mean the Employer Values Their Staff

Another potential benefit is that a sign-on bonus can indicate that the employer values their staff. 

Seeing an employer offering a sign-on bonus could mean that the employer values attracting good talent and is willing to pay up to do so.

The Bad Things About Sign-on Bonuses

Now, seeing a sign-on bonus and signing on that dotted line is not all sunshine and roses. Not even close. There are definitely some downsides you should keep in mind.

1. Sign-On Bonuses May Have Strings Attached

The most notable downside to sign-on bonuses is that they come with strings attached usually in the form of a service agreement. 

For instance, you might get a $10,000 bonus with a two-year service agreement. 

This means you agree to stay with the employer for two years in exchange for the $10,000 sign-on bonus. 

If you leave early, you might have to repay part or all of the bonus.

Note!

Real quick, while I’m on this, I do think it’s worth mentioning that having some kind of strings attached does make sense to a certain extent.

The employer doesn’t want to be in a situation where they hire someone on day 1, give them a sign-on bonus on day 2, and then that person quits on day 3 after receiving the sign-on bonus.

So having some strings attached does kind of make sense to a certain extent.

The main issue is when the stipulation is something really weird or overly restrictive or when you don’t know about the fine print when you’re signing the contract.

But more on that later. 

2. Tax Implications

Another downside is the tax implications. Sign-on bonuses are considered income and will be taxed accordingly. 

It just kind of is what it is as far as earned income and the way it’s taxed. 

The reason why I do have it here as a bad is that for big lump sums, it can be, for lack of a better word, depressing when you see how much they’ll take from your taxes. 

The other issue is if you have to repay the sign-on bonus back. But more on that later.

The Ugly Things About Sign-on Bonuses 

Now let’s talk about the ugly side of these incentives.

Throughout my nursing career, both as an RN and APRN, I’ve had opportunities to accept sign-on bonuses.

And I’ve generally declined them. And it’s because of these reasons. 

1. Underlying Issues With The Job or Company

The first reason, and a very ugly truth about sign-on bonuses, is that they often signal underlying issues with the job or company. 

Employers use these bonuses to attract and retain staff because there’s something undesirable about the position or work environment. 

It could be severe understaffing, unsafe conditions, or a job that most nurses or advanced practice nurses don’t want. 

We live in a capitalistic society, and the executives at these companies aren’t giving out money out of the kindness of their hearts. 

They’re only doing it because market forces, such as difficulties in recruiting and retaining staff, compel them to do so.

2. The Golden Handcuffs Effect in a Bad Situation

Another reason I avoid sign-on bonuses is the fear of being stuck in a bad situation and unable to leave because of the service agreement. 

You might think, “Well, you could always pay it back.” And depending on how the contract is written, that might be an option. 

But consider this: even if I could pay it back, would I be able to do so immediately when needed? 

Depending on how long I’ve been there, it could be a couple of thousand to several thousand dollars I’d have to repay. 

That’s not an insignificant amount of money. Situations like this can force you to stay in a bad situation or make decisions you otherwise wouldn’t.

Should You Take a Sign-On Bonus

Alright, now coming back to my thoughts on sign-on bonuses and whether or not you should consider them. 

Well, like all things, it really depends on your particular situation.

It also depends on making sure you understand what the heck is going on in that work environment. 

Lastly, you need to understand the fine print involved in that sign-on bonus. 

Actually, let’s talk real quick about that fine print aspect. 

The Fine Print

I am always amazed at how often people sign things or agree to things without fully understanding what they’re signing or what the actual agreement is.

If you decide to take a sign-on bonus, you need to understand several key points:

1. How Much Are You Getting?

First of all, know exactly how much you’re getting.

2. What’s the Payout?

You need to understand the payout structure of the sign-on bonus. For example, are you going to get all of the money upfront? 

Let’s say you sign a two-year contract. Is the bonus paid in a lump sum, or is it spaced out over those two years? 

If it’s spaced out, how is it distributed? Will you get portions of it at regular intervals, or will you not receive any of the money until the end of the two years? 

These are all crucial details you need to know.

3. How Are They Counting Your Time?

Another important aspect is to clarify how they are counting your work commitment. 

For example, if you sign a 2 year work commitment what do they mean by “two years.” During discussions, they might keep saying “two years,” but what does the contract say? 

Is it exactly two years from your hire date, or is it based on the number of hours you’ve worked? 

This becomes important because life happens—you might need to take FMLA if someone gets sick, go on maternity leave, or switch to part-time for some reason. 

How will these scenarios affect your ability to fulfill the commitment of the sign-on bonus? 

4. What Happens If You Don’t Fulfill Your Agreed-Upon Time

The next thing you need to consider is what happens if you don’t fulfill your agreed-upon commitment.

Do you have to pay back the entire bonus, or is it prorated? These details matter a lot.

Imagine you sign a contract for a $10,000 sign-on bonus with a two-year agreement, so 24 months.

Let’s say you need to leave on the 23rd month, with only one month left to fulfill your obligation.

Depending on how the contract is written, you could be in one of two situations:

  1. Prorated Repayment: You might only have to repay a prorated amount of the $10,000. So if you fulfilled 23 out of 24 months, you would repay just a small portion, maybe around $2,000, depending on the agreed-upon terms.
  2. All-or-Nothing Repayment: If the contract is written as all-or-nothing, you might have to repay the entire $10,000 if you don’t complete the full 24 months.

Understanding this aspect is crucial because it can significantly impact your financial situation if you have to leave the job early.

Considerations

I’ve covered a lot in this video already, and there are timestamps in the descriptions if you need to go back and review something. 

But before I go, I’m going to leave you with five final considerations to keep in mind.

1. Remember You Can Negotiate

The first is understand that you can negotiate, and I strongly encourage you to do so. Of course, try to negotiate for the highest possible sign-on bonus.

But also make sure to negotiate terms that won’t leave you in a bad situation if you have to leave early. 

At a minimum, try to negotiate for a prorated repayment plan if you don’t fulfill the full term. 

This way, you won’t be stuck paying back the entire bonus if you have to leave before the contract period ends.

2. Keep in Mind the Tax Implications

Another important consideration is the tax implications of a sign-on bonus.

Just to clarify, this isn’t tax advice, so always seek the guidance of a tax professional. 

But it’s crucial to understand that sign-on bonuses are considered income and will be taxed accordingly.

Minus the sticker shock of seeing how much of your bonus will go to Uncle Sam, I think the real issue will present itself if you have to repay the bonus. 

Let’s use the example of a $10,000 sign-on bonus paid out over a 24-month period. If you have to leave in the 23rd month, you’ll need to repay a portion of that bonus. 

Even though the bonus was taxed when you received it, you will need to repay the full amount, not the after-tax amount. 

This can create a complex situation because the bonus was taxed over two different tax years. 

To navigate this, you’ll need the help of a tax professional who can guide you on how to handle the repayment and ensure you recoup any taxes paid on the money you’re now returning to the employer. 

3. Figure Out What’s Important to You

The next consideration is to really figure out what’s important to you in any job.

While a sign-on bonus might seem attractive, you need to assess your personal and professional priorities.

Think about aspects like a non-compete clause. Do you want that removed? Maybe you prefer a higher base salary instead of a sign-on bonus.

For example, instead of $40 an hour with a sign-on bonus, you might negotiate for $50 an hour without the bonus.

Consider other benefits too, like productivity incentives, moving expenses, CME reimbursement, or additional vacation time.

These elements can significantly impact your overall job satisfaction and financial well-being. 

Negotiating these aspects can be just as, if not more, beneficial than a one-time bonus. 

4. Know the Sign-On Bonus Rate in Your Area

I briefly touched on this earlier, but it’s important to know the typical sign-on bonus rates in your area if you’re planning to negotiate one. 

Understanding what’s appropriate for your position, whether you’re an LPN, RN, nurse practitioner, or even a CRNA, is essential.

Research what sign-on bonuses are common in your specific field and region. Also, consider what nursing bonuses have been offered by the particular hospital or hospital system you’re negotiating with. 

This knowledge will give you a better idea of what to expect and help you negotiate more effectively.

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Use the NurseMoneyTalk job board to start looking for and applying to jobs near you.

5. Understand That In Some Cases, It Might Be Better to Negotiate a Better Base Wage

My last point, and this is something important to consider, is that sometimes it might be better to negotiate a higher base wage instead of a sign-on bonus. I know this isn’t possible for everyone, but it’s worth mentioning. 

Think about your timeline and goals.

If you plan to stay in the position for a while, well beyond the period covered by the sign-on bonus, negotiating a higher base wage could be more beneficial in the long run.

A higher hourly wage means you’ll continue to benefit from the increased pay throughout your employment, not just during the bonus period.

For example, if you end up working a lot of overtime, time and a half on a higher wage can add up quickly.

Additionally, if your employer offers yearly raises, even a small percentage increase on a higher base wage will result in more money over time. 

Conclusion

In general make a note of what’s important to you, your goals, and where you see yourself in the next few years. 

This will help guide your decisions and ensure you make the best choice for your career and financial well-being.

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