Don't let PTO go to waste: An AI-powered approach to cashing out time

Organizations need to get creative with their financial wellness strategies, and that may mean looking for compensation opportunities in unexpected places — like their paid time off policies.    

Sixty-two percent of employees' PTO goes unused annually, according to PTO fintech platform Sorbet, accounting for more than $300 million in lost wages. And while employees can typically cash out that money at the end of their tenure with a company, a new payroll feature from Sorbet is making it possible for employees to access that money early and use it on demand, without having to leave their job. 

"We know that Americans are suffering from a great deal of financial stress right now," says Veetahl Eilat-Raichel, the co-founder and CEO of Sorbet. "We have the ability to take an otherwise underutilized benefit that's already costing organizations a ton of money and repurpose it into something that will actually provide value to people."  

Read more: For benefit managers, the time to reinvent PTO is now

Sorbet, which already helps employees cash out their unused PTO, has added a new AI-powered feature that works alongside organizations' existing time management system. The AI tracks and analyzes employees' PTO data including how often they're taking their allotted time off, salary and tenure expectations to predict how much time an employee will have accrued over the course of their career with their company. 

Sorbet then turns those hours into a monetary value employees can use as a loan as needed. In the past, employees would have to pay Sorbet interest fees either until they left their company and used the payout to pay back the balance or they repaid the platform out of pocket. Now, employees can opt to have a portion of their paycheck automatically go towards paying down the remaining balance.  

Eilat-Raichel acknowledges that paying people for their unused PTO is not a solution for the long-standing issues of employees not taking enough time off. However, offering a financial incentive could help offset some of the burnout by providing necessary support for the other burdens that may be weighing heavily on them. 

"Employers should encourage their employees to take more time off," Eilat-Raichel says. "But at the end of the day, people still do not feel incentivized or legitimized to use up all of their time. So if they won't use their PTO for a vacation, why not provide it as a financial benefit?" 

Demand for financial support is rising

Employees can benefit from financial wellness programs, and in many cases, are expecting that support from their organizations. Sixty-eight percent of employees say that they actively use or have used their organization's financial support programming, according to a recent survey from financial services company PwC, with 73% of employees stating that employer-provided financial support is an important factor in whether or not they will remain with their current organization. Without it, 44% say money worries have significantly hindered their performance and productivity while at work. 

Read more: Why your financial wellness benefits need to cover payroll deductions

"Employees have been forced to adopt common but harmful financial practices like overspending on their paychecks, payday loans or eating into their long term savings," Eilat-Raichel says. "[As a result], benefit leaders are actively seeking additional opportunities to provide compensation above and beyond the salary." 

In many cases, cashing in their PTO early is helping employees' more than the physical time off would have. In fact, the feedback Sorbet has received from organizations offering the features has shed light on the different kinds of support employees are looking for and the need for more flexible benefit solutions. 

"Employees have used the money to cover adoption fees, emergency medical bills and even to pay for travel and wellness opportunities," Eilat-Raichel says. "The use cases are pretty varied and go above and beyond what traditional PTO could do."