For nearly half of U.S. workers, the amount of paid time off they receive is not the amount they use. According to the Pew Research Center, only 48% of U.S. workers say they use all their vacation days.
That leaves a lot of time and a lot of money on the table.
This is the problem PTO Exchange was built to solve. PTO Exchange, one of our partner organizations at E4E Relief, is an innovative cloud-based platform that allows employees to self-direct unused vacation time to other things of value – including charitable donations to their relief fund. To date, more than 900,000 hours of PTO have been exchanged on the platform, worth a total of $44 million.
Put another way, more than 433 years’ worth of PTO have been exchanged, which, as Josh Reinhard, vice president of sales at PTO Exchange, says “is really cool.”
We recently sat down with Reinhard to talk about the platform and how it partners with companies to provide greater choice and flexibility to employees.
Below are excerpts from our conversation, edited for brevity and clarity.
E4E Relief: Tell us a little bit about PTO Exchange, your mission and how you're accomplishing it out in the world today.
Josh Reinhard: The main thing that we're trying to do with PTO Exchange is to create choice and flexibility for employees and really help them maximize their compensation.
Every employee's compensation is made up of different things: salary and the benefits that they're being offered. Part of those benefits is PTO (paid time off). But a lot of PTO goes unused every year. So, we’re trying to reimagine the way that employees can use this part of their earned compensation and make it so that they can specifically use it for things that are important to them because everybody's needs are different. Everybody is at different stages of their life. So being able to allow an employee to use the value of some of those hours of their PTO and apply it toward meaningful things is really what we're all about.
E4E: So how does it work? What can employees exchange their PTO for?
JR: Broadly speaking, financial wellness and social well-being. On the social well-being side, they can donate it to nonprofits they support. They can give it to an employee relief fund. They can share hours with colleagues in need. On the financial wellness side, employees can route unused PTO hours to their 401Ks, to pay for education expenses or even to travel.
E4E: That's amazing. So how much PTO goes unused every year?
JR: Excluding the public sector, $780 billion worth of PTO is accrued every year, and $218 billion of it goes unused. It's a staggering amount of unused pay time off every year. Now, we want employees to take PTO. In fact, I just came back from taking PTO. What we're trying to solve for is the excessive amount of PTO that employees aren't getting any value from.
E4E: Let's talk about the current state of PTO exchange. What has the past year been like, and what trends are you seeing?
JR: It’s interesting because so much of the difference in the trends that we were seeing in the way that people are using pay time off was COVID-related. Restrictions were in place, and people just weren't going on vacation as much. But even coming out of that time, those trends are still there. The concept of work-from-home or work-from-anywhere has changed the way that PTO is being used. And that's the reason, I think, that PTO requests are still down significantly.
That is juxtaposed against the fact that, when employees are looking for new jobs, the #2 most important thing – more important than retirement, more important than matching, more important than student loan assistance – is the PTO structure of the company that they're applying to. So, it's important to them. But then they're not actually using it, which is what creates the need for solutions like PTO Exchange.
E4E: So how has PTO Exchange evolved over the past few years?
JR: Just in the last 6 months, we added an option for employees to use their PTO to pay for voluntary benefits. Because companies have limited budgets, they want to offer benefits to employees, but they don't know exactly what employees want. So, they are starting to say, ‘We'll make this available, and if you want it, you can get it at a discounted rate.’ So now, employees can use an hour or two of PTO every month to cover the premium of their pet insurance or their hospital indemnity insurance or whatever type of policy they want. That's the new benefit that we're offering, and that came at the request of both employees and partners that we work with.
We also set up a recurring exchange, which was a request that we received from a lot of our clients. It used to be that employees needed to log into the system every time they wanted to make an exchange. Now, if you want to exchange four hours of PTO every month to go towards your relief fund, for example, you can set it to happen automatically.
And then the big one that we're working on right now is a mobile app. I've gotten a preview of it, and it’s awesome. It’s going to be very useful for employees, particularly those who are out in the field or work in hospitality and are never in front of the computer. Being able to give them the option to exchange PTO easily through an app is something we're excited about.
E4E: What benefits are the companies you work with – your clients – seeing from giving their employees access to this ability to exchange PTO?
JR: It’s just a great way to engage your employees and to give them the option to use a benefit that's already being offered in a different way. Our clients can say, ‘Here's a great way for you to give to these nonprofits that we support.’ In the summer, it might be, ‘Don't forget, we have discounted travel through PTO Exchange, and, by the way, you can use some of your excess hours to cover the cost of the airfare or the hotels for your family vacation.’ Or as it's nearing the end of the year, ‘Here’s your chance to max out your 401K or HSA.’ So, you can constantly engage with employees to remind them of the benefit.
And then the downstream effect of that – and this is the biggest one for me – is employee retention. We just did a study among our clients where we looked at the turnover rates of the employees that use PTO exchange versus the employees that don't use it. The turnover rate for users of our system is 50% lower than it is for employees that don't use the benefit.
Going back to your initial question of, What's our mission?’ - that's what we're trying to do. We're trying to create choice and flexibility for the employee. For the employer, we're trying to give them a tool to keep their employees happy and keep them around.
E4E: How have you seen companies use that to keep their emergency financial relief funds sustainable?
JR: PTO Exchange offers an alternative way to encourage participation around a company’s relief fund. There are employees who are philanthropic and want to help their colleagues who are experiencing crisis, but they need every dollar going into their paycheck that they can get. They can't take a payroll deduction. They can't write a check. A lot of times, PTO feels like found money. It makes it so that everyone can get involved. And it’s tax deductible.
E4E: Last question: What else should people know about PTO Exchange. Are there any fun facts, any misconceptions?
JR: The biggest misconception is, ‘Once we partner with PTO Exchange, our employees are not going to use as much PTO.’ In fact, we have seen no effect on the utilization of paid time off. That doesn't decrease.
What ends up happening is the excess PTO that employees just aren't getting any value from is now being exchanged for things that employees really value. So that's the biggest misconception that we always need to clear up.
The other part of this that's a benefit to the company is, if a lot of your paid time off that you don't use gets rolled from one year to the next, that is a liability that the company has to factor in on their balance sheet. So, being able to reduce the liability is a win for the finance department. And the choice and flexibility are a win for employees.
To learn more about PTO Exchange, visit their website.