The latest PTO trend: Letting employees exchange it for cash, retirement savings, or even student loan payments
Good morning!
In an effort to retain employees, companies are getting creative when it comes to how employees take advantage of their paid time off (PTO). Instead of unused days getting rolled over or expiring, organizations are setting up programs that convert them into other funds for employees to use. That includes exchanging them for cash, charitable donations, or contributions to student loan payments, 401(k)s, or healthcare spending accounts (HSAs).
These programs started to gain traction during the pandemic when employees would donate unused PTO to colleagues who needed it most, Megan Wells, vice president and corporate benefit specialist at Goldman Sachs Ayco, a brand of Goldman Sachs wealth services tells Fortune. But since then they’ve expanded, allowing employees to buy, sell, or exchange their vacation days for other uses. Over 25% of Goldman’s more than 400 corporate partners currently have such a PTO program, up from 21% in 2021, according to a recently released benefits report from the company.
“The overall trend we’re seeing now in the benefit and compensation space is finding flexibility and that includes how employees use their PTO,” says Wells.
This is because workers can delegate their time any way they want, which is helpful when there are five generations in the workforce all with different needs, she adds. For instance, those right out of school, who are working long hours may rather put their extra days towards paying off loans, or someone closer to retirement may want to completely maximize their 401(k). Additionally, sources note, convincing other executives of the potential benefits of these plans may not be too much of a challenge, because PTO is traditionally budgeted for in advance.
“Paid time off is already a budgeted expense for companies whether workers take it or not, so this kind of benefit won’t break the bank,” says Jonathan Barber, Head of compensation and Benefits policy research at Goldman Sachs Ayco.
But while paying out PTO may sound like a simple solution, it’s actually rather complicated, he notes, which is why it hasn’t been more widely adopted. The administrative burden it takes to accomplish setting up such a process manually is no easy feat, as HR managers have to comply with a variety of state laws around what employees can and can’t do with their PTO. For instance in California, employers can’t force workers to use all of their PTO by a certain date, and it’s required by law that unused vacation time be carried over.
“You can’t just do what you want with PTO because states have specific rules on what you might have to allocate to an employee,” says Barber. “If you’ve agreed to offer PTO, you can’t just let employees turn it into something else without complying with those rules.”
It’s exactly for that same reason that large companies are more likely to offer these kinds of programs to workers, as they’re more likely to have an established HR arm to withstand it. That said there are a flurry of B2B businesses out there tailored to handle services like these, which may be a good solution for smaller companies, Barber notes. Regardless, he expects more companies overall to adopt this approach in the future.
“I think most companies want their employees to take some vacation, but when it comes to PTO they’re starting to realize that, for better or for worse, not everyone is going to take the time whether they’re given it or not.”
Brit Morse
brit.morse@fortune.com
This story was originally featured on Fortune.com
https://fortune.com/img-assets/wp-content/uploads/2025/04/GettyImages-665391022-e1744917853220.jpg?resize=1200,600
2025-04-18 12:08:29
