How to Read a Locum Tenens Contract
A locum agreement is short, which fools people into skimming it. Almost everything that determines what the assignment is really worth sits in clauses that are not about the rate — how many days you are actually guaranteed, what happens when the facility cancels, who pays for the flight home, and what you may do afterwards.
Sixteen clauses, roughly in the order they cost people money. This is general information, not legal advice; a lawyer licensed in the relevant state is a few hundred dollars and a deductible business expense.
The money clauses
1. The rate, and what it is a rate for
Is $1,600 a day for a shift of any length, or for up to twelve hours with overtime beyond? Does a day mean a calendar day or a shift that crosses midnight? Is there a separate rate for weekends, nights and holidays? A day rate with no defined shift length is an invitation to be worked longer for the same money.
2. Guaranteed minimum days or hours
The most valuable clause in the contract and the most often absent. Without a guarantee, a slow week means an unpaid week — you have travelled, you are in a hotel, and the census dropped. Ask for a guaranteed minimum per week, in writing, and for what happens if the facility does not provide the shifts: are you paid anyway, or released to go home?
3. Call, and how it is paid
Separate the categories: unrestricted call from home, restricted in-house call, and call that turns into actual work. Common structures pay a flat daily stipend for carrying the pager plus an hourly or per-callback rate when activated. A contract that folds call into the day rate without a word about volume is one where you find out in week two.
4. Travel and lodging — booked, reimbursed, or capped
Three different things. Booked means the agency pays the vendor directly and it never touches your income. Reimbursed under an accountable plan means you pay and are repaid, and the reimbursement is not income. A flat travel allowance with no substantiation is ordinary 1099 income to you, taxable, against which you deduct actual costs. Watch for caps ("up to $500 per round trip") that turn into your expense when flights cost more, and for who pays if you fly home mid-assignment.
5. Payment terms
How often — weekly, biweekly, monthly? How long after timesheet submission? Net 30 on a monthly cycle can mean working seven weeks before the first payment arrives, which matters enormously if you have paid for flights and a deposit up front. Ask what happens if the facility disputes a timesheet, and whether payment to you is conditional on the agency being paid by the facility. It should not be.
6. Expenses the contract is silent about
Licensing, DEA registration in a new state, credentialing fees, background checks, drug screens, occupational health clearance, EMR training time, parking at the facility. Individually small, collectively four figures. Ask which of these the agency covers and whether training and orientation are paid time.
The risk clauses
7. Malpractice: occurrence or claims-made
Get the answer in writing, and get the certificate rather than a summary. If it is claims-made, establish who buys the tail and whether that obligation survives every way the engagement could end. A claims-made policy with no tail leaves you personally exposed for claims filed years after you leave. Full detail in malpractice and tail coverage.
8. Indemnification and hold-harmless
Some agreements require you to indemnify the agency or the facility for claims arising from your services. That can reach beyond what your malpractice policy covers, and an uninsured contractual indemnity is a personal liability. This is the clause most worth a lawyer's eye. Mutual indemnification is reasonable; one-way is not.
9. Cancellation — theirs
What notice must the facility or agency give, and what do you get if they give less? Thirty days' notice is typical; anything shorter should carry compensation, because you have already turned down other work. Ask specifically about cancellation before the assignment starts, when you may have declined two other contracts and have non-refundable travel booked.
10. Cancellation — yours
Symmetry is a fair ask. If they can cancel on thirty days, so should you. Watch for clawbacks: repayment of licensing or travel costs if you leave early, or forfeiture of a completion bonus. Those can be reasonable in principle and punitive in drafting — check whether they apply if you leave for cause, or for illness.
11. Termination for cause, and what counts
"For cause" definitions that include loss of privileges, a complaint, or a facility simply requesting your removal give the other side a route around the notice period. Ask for a cure period where the conduct is curable.
The clauses that follow you home
12. Restrictive covenants and non-competes
Locum agreements frequently restrict you from working at the facility — or within a radius of it — for a period after the assignment, whether directly or through another agency. Twelve to twenty-four months and a defined radius are common. Check the scope: a covenant that names an entire health system can quietly exclude you from a whole metropolitan area.
Enforceability varies enormously by state, and several states restrict or prohibit non-competes for physicians specifically. Do not rely on an internet answer about your state; the analysis is state-specific and changes.
13. The conversion (placement) fee
If the facility hires you permanently within a stated window, the agency is typically owed a fee — sometimes tens of thousands of dollars. That is normal, and it is between the agency and the facility. The clause to look for is one making you liable for it, or one so broad that it blocks a permanent job you would otherwise take. Negotiate a defined window and a buyout figure rather than an open-ended prohibition.
14. Exclusivity and presentation rights
Some agreements prevent you working with other agencies at the same facility, or bind you to the agency that first "presented" you to a client for a period. Both are workable if bounded and dangerous if open-ended, especially if you work through several agencies. Ask that presentation rights lapse after a defined period with no offer.
15. Dispute resolution, governing law and venue
Mandatory arbitration in the agency's home state, with your own costs, changes the practical value of every other right in the document. It is not automatically unacceptable — it is a term to price, and occasionally to negotiate.
16. The entire-agreement clause
Standard, and the reason everything matters: it means the promises made on the phone are not part of the deal. If the recruiter said the facility never cancels, the flight home is covered, or the tail is included, it is worth nothing unless it is in the document or an attached schedule.
The single habit that changes outcomes
Send one email before you sign, listing your questions, and ask for written answers. Not because you distrust the recruiter — most are straightforward — but because the answers become documents, and because a request that takes ten minutes to answer and does not get answered has told you something. Then ask for anything material to be added to the agreement itself.
The email to send
- What is the guaranteed minimum number of days or hours per week, and what happens if the facility does not provide them?
- What is the defined shift length for the day rate, and how are hours beyond it paid?
- How is call compensated — carrying it, and being activated?
- Is malpractice occurrence or claims-made? If claims-made, who buys the tail, and does that survive early termination? May I see the certificate?
- Which travel and lodging costs are booked directly, which are reimbursed, and what are the caps?
- Who pays for licensing, DEA, credentialing, background checks and occupational health?
- Is orientation and EMR training paid?
- What notice applies to cancellation by each side, and what compensation follows short notice?
- Is payment to me conditional on the agency being paid by the facility?
- What restrictive covenant applies after the assignment, over what radius and what period?
- What are the conversion-fee terms if the facility offers me a permanent post?
Then run the numbers
Once the terms are settled, the arithmetic is the easy part — and it is where the guarantee clause earns its keep. A $1,600 day rate with four guaranteed days is worth $268,800 a year over 42 weeks; the same rate with five is worth $336,000. That single clause is worth more than the difference between the best and worst state tax code in the country, twice over. Put both versions through the calculator before you decide which contract is better.
Sources and further reading
- Internal Revenue Service, 26 CFR § 1.62-2 — accountable plan requirements, which determine whether a travel reimbursement is income to you.
- Internal Revenue Service, Independent Contractor (Self-Employed) or Employee? — the control factors a contract's terms bear on.
- National Practitioner Data Bank, NPDB — why settlement and consent-to-settle terms matter beyond the immediate claim.
- 26 U.S.C. § 162 — legal fees for contract review are a deductible business expense.
- Restrictive covenant enforceability is governed by state law and varies widely; several states restrict physician non-competes specifically. Consult an attorney licensed in the relevant state.
This is general educational information about terms commonly seen in locum tenens agreements. It is not legal advice, no attorney-client relationship arises from reading it, and no clause described here is a substitute for review of your actual contract by a lawyer licensed in the relevant state.
Compare two offers properly
The locum take-home calculator turns rate, guaranteed days, contract length and the expenses you carry into one comparable take-home figure.