It's November, and you've been so overwhelmed at work you still have five vacation days you haven't used this year. You can: (a) try to squeeze it in amid all your crazy year-end deadlines; (b) carry it over to next year and use it then if you're allowed to do so; or (c) if you work at a place with a use-it-or-lose-it policy, pass it up.
For those who find none of those choices appealing, a new start-up wants to offer an option (d). PTO Exchange, which launched Oct. 4, plans to work with employers to let their workers trade in the value of their unused "paid time off" for other perks. These could include additional contributions to a 401(k) account, money to put toward college tuition expenses, reimbursement for travel expenses or a donation to a favorite charity.
Co-founder Rob Whalen says that since the start-up launched at a recent human resources technology conference, it has heard from 150 interested companies, including large retailers and pharmaceutical firms, and is in advanced discussions with several major human resources consulting firms. "They're trying to offer flexibility to their employees," Whalen says.
But employers are also motivated to remove what has become a growing accounting burden. When employees don't use all the time off they're given each year, corporations have to carry that on their books, an accounting liability that isn't offset by assets and some firms pay out to employees when they decide to leave the company. "It's something CFOs worry about," says PTO Exchange co-founder Todd Lucas.
That problem has been getting more attention from corporate finance executives for a few reasons. For one, some states have adopted laws that prohibit companies from having "use-it-or-lose-it policies" for employee vacation time, meaning more workers are able to carry it over, increasing the liability. At the same time, paid leave laws are being adopted in a growing number of states, giving paid time off to more workers who previously never received it.
A recent analysis of financial statements, conducted by Oxford Economics and commissioned by the U.S. Travel Assn.'s Project: Time Off initiative, estimated that some $272 billion in accrued vacation time is sitting on corporate balance sheets.
The same report from the travel association found that in 2015, workers who did not use all their paid time off had an average of 10.4 days of unused vacation. Its survey of 5,600 workers found that 59% of managers and 53% of all employees said they did not use all their allotted vacation time.
Indeed, this helps explain why some companies have adopted "unlimited leave" policies when it comes to vacation. Although the idea sounds like a generous move — and it potentially can be in the right environment — it also helps businesses eliminate that accounting liability. After all, if there's no set vacation allotment, there's no accrued time off to weigh down the books.
This is where PTO Exchange comes in: If employees can't take the unused vacation time, they can trade in the value of the accrued time off for another benefit, such as more money in their health savings account or a reimbursement toward travel bought on Priceline.
The start-up charges a 3% transaction fee, which can be set up for either the employer or worker to pay, as well as a per-employee fee charged to the company.
One particular area of interest from employers, Whalen and Lucas say, is using the platform to make it easier for employees to donate a few hours or days to co-workers in need of more time off because of lengthy illnesses, deaths or other personal hardships. "We're getting a lot of interest just on that feature alone," Lucas says. For some companies, the other trade-in perks are "just icing on the cake."