Most clinicians enter locum tenens work for the freedom — freedom to choose assignments, set schedules, and escape the politics of a permanent position. But that freedom only materializes if your contract actually reflects it.
Locum tenens contracts are legally binding documents, and they're not written with your interests as the default. Understanding what's negotiable — and what red flags to walk away from — is the difference between a rewarding assignment and a costly dispute.
This guide walks through the key contract sections every clinician should scrutinize before signing.
Why Contracts Deserve More Attention Than They Get
Many clinicians skim contracts, especially when an agency or hospital legal team says "this is our standard agreement." There's no such thing as a non-negotiable contract. Every term you accept is a term you've agreed to enforce against yourself.
The stakes in locum tenens are higher than in employed positions because you're often working across state lines, under different credentialing structures, and with varying malpractice coverage arrangements. A clause that seems minor can affect your ability to practice, your income stability, and your exposure to liability.
If you're new to locum work and still building your understanding of the landscape, Locum Tenens 101: A Complete Guide for Clinicians covers the fundamentals before you get into contract specifics.
Compensation: What the Numbers Actually Mean
Bill Rate vs. Pay Rate
When an agency places you, they negotiate a bill rate with the facility and pay you a portion of it. You will rarely see the full bill rate disclosed. This isn't inherently dishonest, but it matters because the spread between bill rate and your pay rate determines whether the agency is acting as a fair broker or extracting margin at your expense.
Some agencies disclose their rates voluntarily. Ask directly: "What is the facility bill rate for this assignment?" If the answer is vague, that's information too.
Guaranteed Hours and Cancellation Pay
Most locum contracts include a minimum hours guarantee. Read the cancellation language carefully:
- What happens if the facility cancels your assignment with less than 48 hours' notice?
- Is there a "kill fee" for short-notice cancellations, or do you absorb the cost?
- What constitutes a shift cancellation versus a schedule change?
Facilities cancel shifts. It happens. Without guaranteed pay provisions, you can lose income on travel and accommodations you've already booked. Negotiate a cancellation clause that covers at least 4–8 hours of pay for any shift canceled within 24 hours.
Overtime and Holiday Rates
Not all locum contracts include overtime provisions. Some treat 10-hour shifts and 12-hour shifts identically. Ask specifically:
- At what hour threshold does overtime pay apply?
- Are holidays compensated at a premium rate?
- Is weekend pay differentiated from weekday pay?
For a deeper look at compensation benchmarks and how to evaluate whether a rate is competitive, What Locum Tenens Physicians Actually Earn — And How to Maximize Your Pay breaks down specialty-by-specialty figures you can use as reference points.
Malpractice Coverage: The Single Most Important Clause
Malpractice is where contracts get the most dangerous if misread.
Occurrence vs. Claims-Made Coverage
There are two types of malpractice policies:
Occurrence-based: Covers any incident that happened during the coverage period, regardless of when the claim is filed. If a patient sues you three years after an assignment ended, you're covered as long as the incident occurred while you were insured.
Claims-made: Only covers claims filed while the policy is active. If the policy lapses or ends, you are unprotected for incidents that occurred during the covered period unless you purchase a "tail."
Claims-made policies are cheaper and more common in locum arrangements. But if you're covered by a claims-made policy, you must confirm who pays for the tail coverage when the assignment ends — you or the agency/facility.
Never assume tail coverage is included. Ask explicitly, get it in writing.
Coverage Limits
Standard malpractice limits in most states are $1 million per occurrence / $3 million aggregate. Some high-acuity specialties (surgery, OB/GYN, emergency medicine) require higher limits. Verify that the limits in the contract meet or exceed the minimums required in the state where you'll be practicing.
Named Insured vs. Additional Insured
Your contract should name you specifically as an insured party, not just the agency. "Additional insured" status is weaker and may limit your ability to independently defend a claim.
Licensing and Credentialing Provisions
Who Pays for Licensing?
Locum assignments often require licensure in states where you're not currently licensed. The cost and timeline for new licenses can range from $100 to over $600 per state, plus weeks or months of processing time.
Negotiate clearly: Does the agency reimburse state licensing fees? What about DEA registration if required? What happens if the license takes longer than expected to process — is the assignment held, or does it fall through?
Credentialing delays are among the most common reasons locum placements get derailed. 5 Credentialing Bottlenecks That Delay Locum Placements outlines what typically causes these delays and how modern platforms are addressing them — useful context if you're planning your timeline.
Credentialing Timeline Guarantees
Some contracts state that your assignment begins on a specific date contingent on credentialing completion. If credentialing is delayed through no fault of your own, you shouldn't lose income. Ask: Is there a pay guarantee if the facility's credentialing process delays the start date?
License Portability
If you hold a compact license (the Interstate Medical Licensure Compact for MDs/DOs, or the Nurse Licensure Compact for RNs), confirm the contract acknowledges compact licensure and doesn't require you to obtain a full state license unnecessarily.
Non-Compete and Exclusivity Clauses
This is one of the most overlooked sections of locum contracts — and one of the most consequential.
Non-Compete Restrictions
Some agency contracts prohibit you from working directly with a facility after your assignment ends — without going through the agency — for 12 to 24 months. The enforcement varies by state (California, for example, does not enforce most non-competes), but in states where they are enforceable, this clause can:
- Prevent you from accepting a permanent offer from a facility you've worked at
- Block you from negotiating directly for future locum assignments at that same facility
- Restrict your ability to work for competing agencies with relationships at the same facility
Push back on overly broad non-compete clauses. A reasonable restriction is: "Clinician may not be directly employed by Facility X within 90 days of assignment end without agency's consent." An unreasonable restriction is: "Clinician may not engage in any professional capacity with Facility X for 24 months."
Exclusivity Clauses
Some agencies try to make their agreement exclusive — meaning you can only work through them for a defined period. Exclusivity limits your ability to pick up additional assignments through other channels and gives you less leverage to walk away from bad terms. Unless the agency is offering something exceptional in return, don't sign exclusivity.
Housing, Travel, and Expense Reimbursement
What Should Be Included
Most locum contracts include housing stipends or direct housing arrangements, airfare or mileage reimbursement, and rental car or transportation allowances. Make sure the contract specifies:
- Dollar caps or actual coverage: Does the housing stipend match realistic local costs, or is it set at a rate from three years ago?
- Booking process: Can you choose your own housing, or does the agency book it?
- Travel reimbursement timing: Is mileage/airfare reimbursed upfront, with each paycheck, or only after the assignment completes?
- Incidental expenses: Are meals, parking, or other on-assignment expenses covered?
Tax Implications of Stipends
Housing and travel stipends are generally tax-free if you meet IRS criteria for a "tax home" — meaning you have a permanent residence you return to and are working temporarily away from it. If you don't maintain a permanent tax home, these stipends become taxable income.
This is a nuance worth discussing with a tax advisor before your first assignment, not after. Contracts that describe stipends without explaining their tax treatment are common; don't assume tax-free status.
Termination Clauses
Notice Periods
Both parties should have a defined notice period to terminate the contract without cause. Typical ranges are 14 to 30 days. Be wary of:
- Asymmetric notice periods: The facility can end with 7 days' notice, but you must give 30. This is unfair leverage.
- No-notice termination for cause clauses: What constitutes "cause" should be defined explicitly. "Failure to perform" is too vague. Insist on specificity.
Assignment Completion Requirements
Some contracts require you to complete a minimum number of shifts before you can leave without financial penalty. Understand what happens if a personal or family emergency prevents you from completing the assignment — is there a force majeure provision?
What a Strong Contract Looks Like
A clinician-friendly locum tenens contract will:
- State your hourly or daily rate explicitly, with overtime thresholds
- Include a guaranteed hours provision with cancellation pay
- Confirm occurrence-based malpractice coverage, or clearly assign responsibility for tail coverage
- Specify who pays for licensing fees and DEA registration
- Name you individually as an insured party
- Include symmetric notice periods for termination (14–30 days for both parties)
- Provide clear housing and travel stipend amounts
- Restrict any non-compete to a reasonable scope, duration, and geography
If an agency or facility pushes back hard on all of these, consider it a signal about how they'll treat disputes if something goes wrong.
Getting Help Reading Contracts
You don't have to parse legal language alone. Options include:
- Healthcare attorneys: Many specialize in physician contracts and will review an agreement for a flat fee ($300–$700 is typical). Well worth it for a multi-month engagement.
- Your state medical society: Some offer contract review services for members.
- Physician-focused financial advisors: Can flag compensation red flags and tax treatment issues.
Platforms like Rediworks make it easier to find assignments and manage the logistics — but any contract you sign, regardless of platform, is your responsibility to understand. Empowering Clinicians: The Rediworks Experience covers how the platform is designed to give clinicians more transparency and control over their assignments.
The Negotiation Mindset
The most important shift is treating contract negotiation as normal, not adversarial. Agencies and facilities negotiate these terms constantly. A clinician who asks clear, specific questions about compensation, coverage, and exit terms is signaling professionalism — not difficulty.
You don't need to negotiate every clause. Identify the two or three terms that matter most to your situation — likely malpractice coverage, cancellation pay, and non-compete scope — and focus your energy there. Make requests specific and reasonable, and be prepared to walk away if critical protections are unavailable.
The contract you sign shapes the entire assignment. Taking an hour to read it carefully, ask the right questions, and push back where necessary is the highest-leverage time you'll spend before your first shift.