Pulse - July 2022 - 17

THE RVT
Signing Bonus Basics
Theresa Cosper-Roberts, RVT
Veterinary Assistant *$5,000 sign on bonus*
Registered Veterinary Technicians - $4000 New Hire
Bonus!
Veterinary Receptionist *$1,000 Sign-on bonus
EMERGENCY VETERINARIAN NEEDED ASAP
***$100K Sign-On Bonus Available***
If you are a veterinary professional currently seeking a new position
during " the great resignation, " you have likely seen dozens of
hospitals advertising positions with seemingly ridiculous sign-on
bonuses. Unfortunately, business courses don't play an important
role in most veterinary curriculum, so many of us don't know
much about sign-on bonuses.
Bonus basics
A signing bonus, or sign-on bonus, is a one-time payment that one
receives in addition to agreed-upon compensation when starting
a new position. In the past, bonuses of this nature were typically
reserved for executives or clinicians specializing in high-demand
areas. However, given the shortage of veterinary professionals, signing
bonuses are becoming more common, especially for experienced
technicians.
The structure of sign-on bonuses may vary based on the position,
as well as the specialty. They may be given as a one-time payment
upon hire, or as structured payments over a defined period.
These bonuses are designed to attract ideal applicants (or even just
a warm body in some cases). Often, these bonuses require candidates
to stay with the company for a set period of time, such as six
to twelve months.
It is a one-time deal
Sign-on bonuses are one-time bonuses, even when issued as periodic
payments. They are not the same as retention bonuses, performance
bonuses, or even holiday bonuses.
You will not receive the full advertised amount
Signing bonuses are subject to state and federal bonus tax withholding
in addition to " normal " withholdings. For example, a
$10,000 bonus issued separately from a regular paycheck may be
subject to a 22% federal flat bonus tax, 10.23% state flat bonus tax,
and 7.65% FICA tax withholdings, plus any additional withholding
to which one may be subject. This means, that of a $10,000
bonus, the net pay may be approximately $6,000.
Is it beneficial?
When entering negotiations for a position, consider whether
accepting a sign-on bonus will truly be beneficial. Current times
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JULY 2022
17
aside, signing bonuses may be provided when employers cannot
offer a competitive wage. They may also be used to draw attention
away from a lower hourly rate or base salary. Be sure to check
the compensation benchmarks for the position in the area (and
at large). If the base pay is less than current industry benchmarks,
will the one-time bonus make up the difference in pay if staying
beyond the contracted period?
For example, a prospective employee receives 2 job offers:
Offer A: $24/hr. @40hr/wk+ $10,000 sign-on bonus= $59,920
for the first year, and $49,920 in subsequent years
Offer B: $28/hr. @40hr/wk= $58,240 for the first year and
each subsequent year
After 5 years in the position, Offer A will have earned a gross
pay of $259,600, while Offer B will have earned $291,200. As
illustrated above, while the bonus may have appeared to be may
seem beneficial up front, it is not a replacement for fair and competitive
base pay.
Bonuses may be subject to tenure requirements
Most, sign-on bonuses require that the new employee stay with
the company for a defined period. If the employee leaves before
that time, they may be required to pay back the FULL amount
of the bonus, or there may be a forgiveness repayment structure
in place. IF a forgiveness structure is in place, it will clearly dictate
how much of a bonus is forgiven based on the length of time
employed. For example, if a bonus has a 12-month tenure requirement,
each month 1/12 of the bonus is forgiven.
It is important to note that this repayment may be required
whether the employee leaves voluntarily or if they are terminated
with or without cause. Repayment may also be required in case of
any instances of misconduct or other violations of their employment
agreement.
Important Questions
Before accepting a sign on bonus, be sure that you fully understand
all details of the agreement. Questions to consider asking
during negotiations should include:
In lieu of a sign-on bonus, it is possible to increase the base
compensation to _______? If not, is it possible to reduce the bonus
amount and have the remainder added to the base compensation?
Is the sign-on bonus issued upfront or through structured payments?
If it is issued upfront, is it upon hire, or with the first
paycheck? If it is structured, what is the pay schedule? Can this
schedule be modified?
Is there a tenure requirement? If yes, how long is the required
period? Is there a forgiveness repayment structure in place and
what are the terms? If so, how long is the repayment period? P
Pulse - July 2022

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