In the wake of the COVID-19 pandemic, hospitals and other healthcare organizations suffered crippling staffing shortages that forced them to get creative in recruiting and retaining nurses. One solution that significantly gained popularity was the use of travel nurses. Travel nurses are experienced registered nurses (RNs) or licensed practical nurses (LPNs) who temporarily fill staffing needs at healthcare facilities across the country.
The use of travel nurses has been beneficial for both hospitals and nurses. However, travel nursing agency rates have skyrocketed in recent years, sparking concern about the lack of transparency surrounding travel nurse salaries. Additionally, some travel nursing agencies have implemented policies that hinder their nurses from taking full-time employment with contract facilities. In response, several states have passed laws requiring agencies to be more transparent about travel nurse salaries and to strike down policies that remove nurses’ freedom to work for their employer of choice.
What is Salary Transparency?
Salary transparency is the practice of making salary information readily available to employees. Salary transparency promotes fairness and equity in the workplace by ensuring everyone is paid fairly for their skills, experience, and qualifications.
Illinois HB 4666 and Salary Transparency
The State of Illinois recently passed a bill (HB 4666) that reforms nurse staffing agencies’ business and labor practices. This legislation is in direct response to the prolonged, increased demand for nurses during the COVID-19 pandemic. The bill seeks to increase transparency around fees charged to facilities, nurse pay, and labor practices. It also expands protections for workers referred by nurse agencies.
If enacted into law, this bill will help healthcare facilities better understand the cost of travel nurses and make informed decisions about whether to use their services. The bill requires nurse staffing agencies to disclose the fees they charge to healthcare facilities and any other compensation the agency receives. Additionally, it prohibits agencies from requiring nurses to sign non-compete contracts or pay damages if they take a full-time position with the contract facility.
This new law gives nurses more freedom to work for the employer of their choice and receive the salary they deserve. Finally, the bill requires agencies to notify the Illinois Department of Labor (IDOL) of any new contracts they enter into with healthcare facilities.
The increased transparency and protections afforded to nurses by this bill will help ensure that nurse agencies compensate travel nurses fairly for their work. Additionally, it may set a precedent for other states to follow suit and pass similar legislation.
Salary Transparency Laws in Other States
Many states have passed salary transparency laws, including Colorado, Connecticut, Maryland, Nevada, Rhode Island, and Washington. These states have all passed legislation requiring employers to either provide a salary range to candidates upon request or, in some cases, automatically after the first interview. The laws in these states vary regarding when they take effect and which types of employees are affected. However, they all represent a commitment to pay transparency on the part of the state government.
State Legislation to Cap Agency Nurse Salaries
In addition to salary transparency laws, some states have enacted legislation that limits the amount agencies can charge for travel nurses. In January 2022, Massachusetts passed 101 CMR 345, which dictates the maximum amount a nursing agency may charge for nurses and nurse aides. Minnesota also has state-mandated caps on nurse agency charges for nursing home contracts.
While these laws may protect the budgets of healthcare facilities, they could also have unintended consequences. Travel nurse agencies may be less likely to send nurses to states with salary caps, or they may reduce the salary they offer to nurses to stay within the budget set by the state.
Federal Action on Agency Nurse Salary and Agency Rate Caps
There’s currently no legislation to regulate travel nurse salaries or cap nurse agency rates at the federal level. However, that could change in the future.
In January 2022, members of Congress sent a memo to the White House COVID-19 Response Team urging them to investigate possible antitrust activity and consumer protection law violations by nurse staffing agencies. The writers accuse agencies of inflating prices for their services, sometimes by two or three times pre-pandemic rates, during the COVID-19 pandemic. The letter, which urges the government to take action, could result in legislation on a national scale.
More recently, North Dakota Senator Kevin Cramer introduced the “Travel Nursing Agency Transparency Study Act” in the 117th Congress. The bill would require the Government Accountability Office (GAO) to study the effects of travel nurse agencies on the healthcare industry during the COVID-19 pandemic. The study would consider such agencies’ business and payment practices, including any potential price gouging and taking of excessive profits.
Additionally, the study would look at how different states that imposed caps on travel nurse pay were affected by the market reaction to such caps. The GAO would report the findings of the study to Congress.
Why Salary Transparency is Important in Travel Nursing
Nurses have long been underpaid for their work, and salary transparency is one way to help ensure that employers give them a fair wage. When hospitals and other healthcare facilities know how much agencies are paying their nurses, they can ensure that the agencies pay nurses appropriately. Additionally, salary transparency can help to level the playing field between different agencies, ensuring that nurses have a choice of where they work.
In the past, many travel nurse agencies have taken advantage of nurses by paying them low salaries and charging high fees to healthcare facilities. The new laws passed in Illinois and other states may be a step in the right direction, but legislators should proceed cautiously. If lawmakers don’t carefully craft salary transparency laws, they could cause unintentional harm.
The Downside of Salary Transparency Laws
While the benefits of salary transparency seem apparent, potential downsides exist. Salary transparency laws may hurt the salary negotiation process. If employers know how much an agency pays a travel nurse, they may be less likely to negotiate a higher salary. This lack of leverage could result in travel nurses making less money than they’re worth.
Additionally, salary transparency laws could decrease the number of travel nurse agencies operating in a state. The reduction in agencies could limit the number of travel nursing opportunities available to nurses. If agencies can’t make a profit, the lack of revenue may force them to close their doors.
Finally, salary transparency laws could harm the quality of patient care. If agencies can’t pay a competitive salary to seasoned nurses, they may take on less-experienced nurses in a desperate bid to fill positions. A reduction in the education and competency of the travel nursing workforce could lead to a decrease in the quality of care.
How Travel Nurses Can Ensure They’re Earning a Fair Wage
Despite any potential downsides of salary transparency or nursing agency rate laws, travel nurses have steps they can take to ensure they’re earning their fair share.
First, nurses should research and ensure they understand the salary range for their position in their state. Armed with this information, they can negotiate a fair salary with their agency.
Second, nurses should know their agencies’ fees to healthcare facilities to ensure they’re reasonable and in line with industry standards. An agency charging excessive fees may mean less money for their nurses.
Finally, nurses should choose an agency that’s upfront about its pay rates and charges. An agency willing to be transparent about its pay rates is likely to be more fair and equitable in its treatment of nurses.
The Bottom Line
Salary transparency is beneficial to all workers, including travel nurses. It gives them more information about their potential earnings and allows them to make sure they’re earning a fair salary. Additionally, it may help level the playing field between agencies and help nurses choose the right employers.
However, legislation dictating salary caps could have unintended consequences, such as making it harder for agencies to send nurses to certain states or reducing the salary they offer to nurses. While states and healthcare organizations continue to brainstorm creative ways to manage the nursing shortage, it’s critical to weigh policy decisions that could further harm an already fragile system.
For the latest information, read The State of Salary Transparency in Healthcare to find details from the U.S. states with salary transparency laws in place and more on the topic.