ALEXANDRIA, Va.—Startup companies that pay employees for their paid time off are popping up in the U.S., reports Wired. These companies work with employers to give their workers cash for their unused vacation time.
For employees, the incentive is extra cash, and for employers, these startups say the perk improves retention and could help companies pay out less money to workers if they have an existing PTO pay out policy when an employee leaves. If PTO can be cashed out by employees at any time, companies can save money in the long run because when employees do depart the company, they may be making a high salary.
However, a critical view of cash for PTO is that vacation time is not equal to the amount of cash received. “The purpose of vacation is not to give people money but to sustain them through a career or a long period of hard work,” Josh Bersin, an analyst who tracks HR technology, told Wired.
Bersin told Wired that with a potential recession, employers are going to be focused on productivity, and they should want their employees to take time off, since well-rested people get more done.
“You really want to have a work environment where people are taking vacation, because then other people feel comfortable taking vacation,” he said. “If you want to give somebody some money, just give them the money. Why take it out of their time off?”
Still, many Americans do not use all of their time off. A record 768 million U.S. vacation days went unused in 2018, according to the U.S. Travel Association, and that number most likely increased over the pandemic. Although getting cash for PTO doesn’t help the root cause of unused vacation time, it does give them immediate compensation, writes Wired.
Sorbet is a startup that analyses a company’s employees and predicts how much PTO a worker will take based on past behavior and seasonal workload fluctuation. It then offers employees cash for the unused PTO they most likely won’t use and gives the company a low-interest loan to cover the payout, if needed.
Another cash-for-PTO startup, PTO Genius has an algorithm that monitors employees, and those that are at risk for burnout, based on factors such as long hours and behavior changes, are nudged to take time off. It also offers employees cash for their unused vacation if they decide not to take it.
Cash isn’t the only option for some of these startups. Some employers use this software to convert the cash value of an employee’s time off into retirement savings, student loan payments, charitable donations or travel costs. However, Sorbet says that cash appears to be what employees want most.
These startups charge the workers fees for their PTO-to-cash transaction, however. One company, PTO Exchange, charges a 7.5% service fee, which goes toward business expenses and to avoid tax consequences for employers and workers. Some employers add on another fee for themselves as well.
NACS hosted three webinars this summer that discussed innovative ways to address the labor shortage facing the convenience retailing industry, including flexible and innovative scheduling.
NACS has partnered with The Good Jobs Institute on how c-store operators can provide “good jobs,” which meet people’s basic needs and offer conditions for engagement and motivation. The Good Jobs Calculator, designed exclusively for NACS members and the convenience industry, allows retailers to use their own data and customized assumptions about the amount of improvement or uplift achievable, enabling executives to run scenarios on the bottom-line impact of a Good Jobs system.
Revisit “Understanding Your Local Labor Landscape” in the December 2021 issue of NACS Magazine for tips on building an effective employee value proposition and how to gain an edge when competing for candidates.
Also, here’s why your employees are “quiet quitting.”