Cash for PTO: This app is helping businesses balance out their PTO debts

Employees are leaving their paid time off on the table — and it’s becoming a major drain on a company’s morale and bottom line.

In 2020, 92% of employees say they left their vacation time unused, according to a survey by financial services firm IPX. On average, employees use 72% of their vacation time per year, and while this may seem like a win for employers, the reality is that unused time is a business liability.

“We're talking about $270 billion in unused vacation liabilities on a company's balance sheets,” says Veetahl Eilat-Raichel, founder of Sorbet, a PTO cash-out platform. “The employee is working days that they haven’t been paid for yet, so the employer effectively owes them this money. It's a liability just like any other liability on the books.”

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PTO is an integral part of an employee’s compensation package, Eilat-Raichel says, and left unused, employers face many financial uncertainties: they may have to pay out a large sum of unused time when an employee leaves, employees may take all their time at the end of the year, and the value can inflate depending on salary fluctuations.

Sorbet is hoping to alleviate these financial pain points, while also addressing the underlying wellness issues around not taking time off. The platform enables employees to cash in a certain amount of PTO for a Visa card that can be used as cash, or for other health and wellness benefits like meditation app subscriptions, gym memberships and other perks.

“We’re right in that unique nexus of taking wellness and making that into a tangible benefit with clear financial value to both employer and employee,” Eilat-Raichel says. “The idea is to optimize the value of employees’ compensation at that point between time taken as time, and then time taken as money.”

Employers can work with Sorbet to specify the parameters of their cash-out policies. For example, employers could require employees to take 80% of their PTO before receiving money or perks for the rest, or this benefit could be exclusively for people who have been at the company for five years or more, Eilat-Raichel says.

“A company wants you to take your annual vacation,” she says. “But if you happen not to use it, you now have this option to improve employee wellness and improve business results at the same time.”

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Sorbet is in the early stages of partnering with employers, but has already gathered data that shows employees use 15% more vacation time with this option than without it. Not only do the financial benefits speak for themselves, the option shows employees you’re meeting them where they’re at.

“People are in different stages in their lives, and a one-size-fits-all approach isn’t going to work for everyone,” Eilat-Raichel says. “If you actually manage your vacation policy and programs well throughout the year, then you will both provide tremendous value to your employees and to your company.”