We receive more questions about compensation than nearly any other area. Money conversations are still a cultural taboo, and this is made worse when we factor in complicated power dynamics, confusing tax laws, and well-intentioned organizations worried about making financial decisions for marginalized people.
Once concerns about compensation models are verbalized, you may be surprised to find that best practices are simpler than they appear. Ethical compensation happens when legal obligations are balanced with intra-organizational fairness.
Compensation Type
Fair compensation is crucial to ethical engagement. Options include:
- Hourly honorariums or per diem rates
- Payroll for long-term engagement
Organizations are often hesitant to take on non-honorarium pay structures owing to budgetary constraints and fears of unintended consequences, particularly for staff members receiving social assistance payments. EST members are paid by organizational payroll biweekly, alongside all other staff. This decision was made for several reasons.
- Social assistance recipients, like all other staff, are entitled to make informed decisions about their hours of work and household budget. If a team member on social assistance needs support balancing hours below a certain threshold, this should always be met with support. However, limiting the entire team to honoraria payments because some individual staff members may experience social assistance challenges disadvantages every member of the team. It may inadvertently infantilize staff, with the organization identifying the best financial choices for team members on their behalf. Members of the EST have remarked “we’re adults – we can manage our own income”.
- It’s a common misconception that cash payments protect social assistance recipients from scrutiny or repayments. This is not the case. Recurring cash payments can place staff under scrutiny if and when their banking records are assessed. It is also worth noting that honoraria are not inherently tax free. Team members earning over $500 per year in honoraria are required to report their earnings. Under the table payments are ethically complicated and may put team members in a position of needing to hide income or falsify records. In turn, this also puts the employer and the broader organization at risk.
- Payroll, like employee status, offers protections to team members. Payment is reliable and predictable. Taxes are withheld, and vacation time is paid out.
- It is also important to note that honoraria pay outs can put the employer and organization at risk as well. If someone is doing ongoing work under the direction of your organization and using materials provided by the organization, with outlined expectations and timelines set by the organization, this person is an employee. This is true Canada-wide, as outlined in federal tax law. Classifying them otherwise and paying them with an honorarium does not change the associated legal expectations. Should the relationship be misrepresented, the Canadian Revenue Agency can reclassify the employee/employer relationship, resulting in costly backpayments and possible penalties. Other risks for the employer include messier paper trails and possible complications during an audit, challenges with funders, lack of clarity around policies and procedures, and critically, gaps in any workplace insurance coverage. While the prospect of potentially doubling your overall staff numbers, or more, overnight is rightfully nerve wracking for small organizations, the reality is that honoraria payouts do not mitigate the risks associated with major staffing changes, and may actually create new, more costly risks.
Despite the clear benefits of payroll, we recognize it is not well suited to time limited engagement. In cases where a hiring and payroll process is impossible, we recommend:
- Outsource to an adequately supported and resourced team. The EST often does consultation for organizations who are dedicated to ethical engagement, but concerned they do not have the structures to ethically recruit and compensate people with lived experience without support. This allows funding to flow through established payroll pathways.
- When honoraria must be used (i.e. for focus groups, or for hiring the services of peer support workers for an event), an hourly rate should be calculated that reflects the average rates for work of this kind, and addresses barriers to access including prep time, travel time, and family care costs where possible. Team members should sign a record of hours and acknowledgement of receipt of honorarium, as a mutually protective step.
Please pay honoraria in cash only. We have received unanimous feedback that gift cards are perceived as infantilizing and a suggestion that lived experts cannot be trusted with cash payments, regardless of the actual intent. If your organizational policy only allows for the use of gift cards, we would recommend returning to option 1.
Hourly rates
“How much should we pay” remains a hot topic in the sector, and the reality is, there is no one answer. Different regions will have different cost of living considerations and different average rates. Moreover, different teams will have different needs. Many of the pay policies we use today only exist because EST members identified opportunities to refine our practices. An open and transparent work environment cannot treat conversations about money as taboos, and must maintain an ongoing dialogue. One theme has remained very consistent over years of dialogue with the EST on fair compensation – the dollar amount matters significantly less than the spirit of pay equity within the organization. People with lived experience should be compensated at a rate identical to other staff at the same tier within the organization. While, on average, EST members work fewer hours than full time staff at the same earning tier, this is not always the case, and consistency must be prioritized above all else. When calculating the value of a staff member’s time, the source of their expertise should not be weighed as a factor.
We have encountered well meaning organizations who offer to pay people with lived experience significantly more than other members of mixed background tables. While we recognize that this is intended to offset power imbalances, it is often read as “othering” or placating. There are steps an organization can take to adjust for power imbalances in pay structures without drastically altering pay scales. We use the following strategies:
- Paying for administrative time. Salaried staff have the benefit of addressing administrative needs like inbox monitoring, reading, brief correspondence, etc. into their typical work hours. Hourly team members are not afforded this privilege. To compensate for time spent on administrative tasks, a 25% administrative time factor is applied to all hourly work. Hours worked are multiplied by 1.25 on each biweekly timesheet before submission to payroll.
- Travel time, similarly, is often thought of as “part of the work day” for salaried staff, with travel to and from events throughout the work day falling under compensated hours. Time spent commuting is often overlooked when assessing hours worked for hourly staff, and
can create an unfair disadvantage. This is especially true of work-from-home teams like the Alliance, where travel varies significantly by role and by time of year. To offset this imbalance, and to prevent team members from taking on the task of constantly quantifying time spent traveling, all EST members are paid one additional hour per in-person work opportunity. In circumstances such as longer distances travelled, or travel through inclement weather, additional payments may apply. - The predictability of income is another key area where organizations may find discrepancies or inequities between staff teams. For hourly staff, the loss of an expected day of income may come with significant personal consequences. We know our staff often prioritize EST work opportunities, and may have declined shifts elsewhere or invested money into family care expenses to ensure they’re able to attend an EST meeting. As a result, a cancelled meeting can cost hourly staff money. To offset this, EST members are given clarity around what qualifies as guaranteed income. This includes the implementation of a cancelled meeting policy. In cases where a meeting is cancelled with less than 7 days notice, the Alliance commits to allocating equivalent hours for another project, or to pay out the missed hours. For example, if a two hour meeting scheduled for a Thursday is cancelled the preceding Friday, regardless of why the cancellation occurred, the impacted EST members will be given the offer to take on an equivalent amount of work elsewhere. If no equivalent opportunities are available, the Alliance will pay out the two hours and associated administrative time. The cancellation policy does not apply to cases where the meeting does occur, but an EST member cannot attend due to illness, schedule conflicts, or other personal circumstances.
- Team members are entitled to reimbursement for work related costs, or can request access to supplies purchased by the organization. This applies to all tools needed for work, including laptops and headphones.
- The Alliance uses a set travel pay policy for all staff that is used during trips including conferences. If an EST member leaves the City of Ottawa for conference attendance, the Alliance will pay out their hourly rate at a rate of 7.5 hrs per day for each day of conference attendance, in an effort to prevent confusion over what constitutes working time vs non- working time. Additionally, prior to leaving the city, each travelling staff member receives
a direct deposit with a budget for daily incidental expenses and a budget for every meal
not covered by the conference. In cases of dietary restrictions that cannot be met by the conference, all meals are covered by the Alliance. Hotels and plane/train tickets are directly purchased by the organization. As a result, all team members are able to travel without requiring the use of any personal funds. Once per diem funds are transferred to staff members, that money becomes their property. We do not require the return of unused funds, and we do not require receipts or expense tracking.
Much of the leg work around fairness in the workplace can be accomplished by reflecting on the privilege built into our structures. How many of us assume everyone present for a lunch meeting can afford to pay for their meal? How many of us assume everyone got there in a vehicle they own? Or that they’d have access to a credit card for hotel incidentals during a conference? Fairness and transparency must be built into compensation strategies for all staff within the organization, not just those with lived experience. Ethical compensation is more about finding a pathway to being a more fair employer than it is about finding a specific hourly rate.
“Ethical compensation is more about finding a pathway to being a more fair employer than it is about finding a specific hourly rate.”
These are lessons we’ve learned in real time. While our engagement model has been highly successful, it’s also important to highlight the areas where we didn’t get it right. The Alliance did not initially have a comprehensive compensation framework in place that accounted for unpaid labour, such as checking emails, administrative tasks, travel time, and cancelled or missed meetings. While we address these issues with the support of the EST, the first group of EST members did face a less fair system while we collectively refined our policies and procedures. We do generally strongly recommend refining team policies and procedures as a collective once the team has been created, but this is one key exception. Any work that can be done to ensure financial security, simpler tax seasons, and fairer pay policies ahead of onboarding should be done ahead of onboarding.