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5 Things to Know Before Breaking a Contract

After graduation, Brittany was thrilled to be offered a job in ICU at the hospital of her choice. She knew she had to sign a contract promising to stay for 2 years, but she signed without reading it and without hesitation. Reading it wouldn’t have made a difference, she wanted the job. People sign contracts all the time. She had just signed a contract with AT&T to bundle her internet and TV service and hadn’t read that one, either. No one really reads contracts, right?

One year down the road, Brittany felt trapped in an unhealthy work environment and wanted out. She didn’t know if she’d have to pay money back or if she’d be making a big career mistake to leave.

It can be difficult in many areas to land a job, especially a residency position, without a contract promising to stay at least 2 years. Employment contracts have become almost industry standard when awarding residency positions.

It’s estimated hospitals spend upwards of $40,000 to orient a newly graduated nurse. If a new nurse leaves before they are fully productive, the hospital loses money. Turnover affects not just the bottom line, it affects morale as well. Preceptors who pour themselves into training a new grad only to have them leave prematurely are less willing to invest themselves in the next new hire who may or may not stay.

Contracts have developed to reduce turnover and allow hospitals to recoup their investment. note: Employment contracts are not to be confused with sign-on bonuses. Sign-on bonuses are typically offered for experienced nurses in hard-to-fill positions. They are not paid in one lump sum, but are paid in installments over time. 

What if you find yourself in the position of not wanting to complete a contract?

Here are 5 important things to know before deciding.


The penalty for breach of contract is typically a pro-rated sum of anywhere from $2,000 to $15,000 dollars and more. Contracts are indeed enforceable. They are legal, binding, and have been vetted by hospital attorneys.

What are the chances of having to pay back thousands of dollars?

Not all hospitals choose to enforce new grad contracts. Sometimes the decision seems arbitrary, due to an internal lack of follow-through and communication. In the same hospital, one new grad may be pursued by collections while another one won’t.  

Some hospitals officially state they will pursue payment but in reality, do not have the will to sue nurses, and simply let it slide once a nurse leaves. Some hospitals go as far as calling and requesting the payback money owed but stop short of using a collection agency. It takes time and money to collect on contracts of this nature, and the hospital may choose to just write it off. 

While some consider contracts more of a deterrent and an honor system, others can and do pursue nurses to the full extent of the law.

Since you can’t know whether or not the hospital will enforce the contract, then assume it will. Even hospitals that haven’t collected in the past can change their practice at any time.

Plan Your Move

Look at all your options. Many times contracts bind you to the hospital, not the unit. Transferring to another unit may resolve any work problems.

If you decide to quit, and once you are ready to give notice, tell your story. Managers and HR staff are people who understand life circumstances. 

A nurse who quits at 3 months because the job is more stressful than anticipated is a very different narrative than the nurse with a small child whose military husband was reassigned across the country. Depending on your circumstances, you may even be released from your contract.

If held to the contract, negotiate a repayment plan.

Have a Strategy for the Next Job

Once you know you are going to leave, control the timing. You want to minimize your employment gap. Make every effort to land a job before you give notice. Give 2 weeks’ notice, but be prepared that you may be dismissed as soon as you give notice.

If you leave at less than a year, then you are still considered a new grad, meaning you do not have the status and employability of an experienced nurse. You will have to explain your short tenure. 

If you are moving to another state, apply for licensure if needed. Submit job applications and start doing interviews. You can conduct Skype interviews, and fly out on your days off for face to face interviews if they’re required.

note: Once you get a job offer and accept, ask for relocation assistance. Some hospitals provide assistance only when asked. The worst that can happen is they say no.

Not a BON Issue

Some nurses worry that they will be reported to their state board of nursing (BON) or board of registered nurses (BRN) for breaking their employment contract. The BON/BRN has no jurisdiction over employee relations. 

You will not be reported to your state board of nursing for breaking your contract.

Not Eligible for Rehire

It’s pretty much guaranteed you will be assigned a Not Eligible for Rehire status when you break a contract. If you work for a large organization, it could mean you will not be hired at any of their facilities.

So when presented with an employment contract, read the contract thoroughly.  Before signing it, make sure you understand it well enough to explain it to someone else. It is OK to ask questions, such as “Is there a provision for having to move because of personal reasons?” Ask questions about the pro-rated payback until you understand it clearly. 

Most importantly, ask yourself if you can make a promise to stay for 2 years in good faith.

About Nurse Beth

Beth Hawkes (Nurse Beth) is an accomplished nurse working in Acute Care as a Staff Development Professional Specialist. She is also an accomplished author, blogger, speaker, and columnist. As Nurse Beth, she regularly answers career-related questions at Check out her book, “Your Last Nursing Class: How to Land Your First Job”.

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