Trainee Compensation Best Practices and Resources 

Should Training Be Paid? 

REDF encourages ESEs to pay participants for their time spent during the job (OTJ) training. If the training program is for job skills for employment at the social enterprise itself, consider: 

• Incorporating paid OTJ training into the job description for the position (and employee or program handbook) and holding workers accountable for attendance, etc. same as you would for a shift
• Making sure ESE follows state employment law, i.e., in many states, training required to maintain a job must be compensated 

REDF also encourages ESEs to explore and consider incentives for some or all of the additional hours that participant workers spend engaged in supports and non-job specific training. If training content is focused more on life skills or preparation for a next step job, and resources are limited: 

• Consider paying or otherwise incentivizing “gateway” sessions that get worker hooked on training or alternatively making them eligible for stipend only if they meet a certain benchmark (e.g., perfect  attendance for week) 
• Have incentive be based around an outcome — e.g., task completion or performance on an  assessment — rather than for time in training 

Refer to pages 3 – 5 in the document below for more considerations for training incentivization.  

Hourly Wages vs. Stipends: 

REDF recommends that trainees be compensated with hourly wages versus stipends. When a trainee is  paid hourly, they are a W-2 employee versus a 1099 contractor (which is the case with stipends). The W-2 employment model is aligned with the social enterprise model and benefits participants by providing  them with more protection/rights as an employee rather than a contractor. Additionally, shifting to a W-2 employment model reduces the tax burden placed on workers already facing challenges to achieving self-sufficiency and assures them coverage by workers compensation. 

Benefits Cliff: 

• Financial Wellness Programming Deep Dive: explains what the benefits cliff is with examples and provides ways SEs can support their employees to curb the effects of the benefits cliff 
• BenefitsCliff.com: a helpful collection of research and resources around benefits cliffs developed by Leap Fund, who offers employer solutions in New York State 
• Benefit Finder: a questionnaire that can help you find benefits you may be eligible to receive and direct you to the agency to apply 
• MIT Living Wage Calculator: a living wage calculator to estimate the cost of living in your community or region based on typical expenses 
• Social Benefit Calculator: a social benefit calculator to help families understand how much  earned income will reduce their benefits over what period so they can build a financial plan, ultimately leading to greater economic mobility

Funding for Training/Programming: 

Most social enterprises in REDF’s network rely on a mix of earned revenue and contributions to cover both business and programmatic costs. Over time, social enterprises usually aim for earned revenue to  cover at least business costs inclusive of the cost of wages for a competitive workforce. Public or philanthropic contributions are then sought and used to pay for any additional expenses incurred for services, supervision, support, and head count because the SE chooses to employ workers not yet  competitive in the labor market.

Download this document to see pages 3 – 5 for more considerations for training incentivization.