Unless you’re a physician or CEO, the $20,000 and $30,000 sign-on should cause you to hesitate for a moment.  Are they trying to buy someone into the position? If so, why?  It doesn’t matter if you’re a pharmacist, physical therapist, med tech, etc. you should look into the situation a little further.  Yes, most healthcare positions are in high demand, but a big sign-on is often used to throw money at a candidate hoping they don’t notice the problem because they’re seeing dollar signs.  Trust me, I love dollar signs too, but not if I’m going to hate life for the next 2-3 years.  Remember, there are terms with a sign-on bonus.

Terms can be a killer

The usual formula used is for every $5-10,000 a candidate receives as sign-on, they will have to commit for one year. Between $11-20,000, a two year commitment and so on.

Everyone has heard this quote from someone, “I want to leave but I have another year on my contract and I will have to pay the whole thing back if I leave early.” Look at the fine print.  Most facilities and companies have a “pay it all back” clause. I’ve even seen some terms where the candidate will have to pay interest on top of the sign-on bonus if they leave early. On a $20,000 sign-on, the employer knows that for the next two years they own you.  Once that $20,000 check hits your hand, it won’t be there in a year. There are bills to pay and toys to buy. You will have to do what they say for two years because most employees won’t have that $20,000 to pay back if they leave early.  Now you’re stuck if the situation is or goes bad.

Try to negotiate the terms.  For example, ask that the money be pro-rated. If you leave after one year, you’d only owe 50%.  Basically you’re keeping the other half as “time served”.  Have the employer pay it in installments.  Over a two year period, they would pay you $2,500 every three months.  Once each installment of the bonus is paid, it isn’t owed back.  It now becomes a retention bonus.  If you want to collect the full amount, you’ll stay the two years.  If something comes up and you need to leave, you’ve collected some of the sign-on but can walk away free and clear.  This will also allow you to collect more money.  How you might ask?

Big single check equals big taxes
That $20,000 check sounds good until Uncle Sam sees it.  The government will tax that check as if you make that on every check.  Needless to say, the government takes quite a chunk of that $20,000 away (Remember, if you leave you pay $20,000 back to the employer even though you never deposited $20,000).  The total taxes taken out of eight $2,500 checks will be less than the amount taken out of one single $20,000 check. That’s why breaking a sign-on bonus up into smaller payments will allow you to pocket more money in the long run. 

If your research on the company or facility comes back favorable and you can negotiate the terms of a sign-on, you have protected yourself if you happen to leave before the contract time line is satisfied without having a huge financial burden.  These are just a couple of ways to protect yourself. Oh…of course, always get the terms in writing and keep a copy close at hand.