PTO Exchange on the Benefits Quarterback Podcast

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What's new and differentiating for you and your organization to retain your most valued and highly skilled employees? How can organizations more broadly support all employees, especially on the heels of COVID-19 with an existing benefit?

Our own Josh Reinhard sat down with Chris Marren on the "For the Win" podcast, a production of Hampton Consulting and Benefits Quarterback. Listen in on their conversation as they discuss how employers can get more out their existing PTO benefit.



PTO Exchange is a benefits platform that turns unused paid time off (PTO) hours into retirement accounts, student loan payments, donations, leave-sharing, charitable causes and more.



PTO Exchange gives companies an enticing benefit that uniquely serves every employee in the organization. And it all works within the system you have in place today.

Employers can really differentiate in the marketplace for talent with PTO Exchange. Reinforcing employee-friendliness and reputational excellence improves talent recruiting and retention. Further, most employers are carrying larger-than-normal PTO balances as liabilities that need to be mitigated and reduced. In simple terms, it pays off for both HR and Finance. Both will appreciate the returns for enhancing PTO benefits and reducing corporate liability.


hampton-companiesHeadquartered in Bucks County, PA, Hampton Companies provide strategic benefit consulting and HR technology solutions to automate, improve and cut costs associated with any business venture. At Hampton Consulting, also known as Benefits Quarterback, the expertise is not limited exclusively to Medical and Prescription plans. They have in-depth knowledge and experience with Group Life/AD&D, Short Term Disability, Long Term Disability, Dental, and Voluntary plans. Hampton partners with clients to develop a multi-year strategy, then take action and make collaborative adjustments.


Chris Marren: Hello everyone, and welcome to another episode of For the Win, a podcast brought to you by Hampton Consulting and Benefits Quarterback, where our intent is to discuss some of the current trends, market forces and concepts that help employers build strong, sustainable businesses. I'm your host, Chris Marren, practice leader at Hampton Consulting and I'm joined today by my colleague, Karina Veloso. Hello, Karina.

Karina Veloso: Hi everyone.

Chris Marren: We're fortunate today to have Josh Reinhard from PTO Exchange as our guest. So welcome and thank you, Josh, for joining us on For the Win.

Josh Reinhard: Thanks so much, Chris, I'm happy to be here.

Chris Marren: Absolutely. I guess we first learned about PTO Exchange a couple of months ago from Bobby Kloss, who's the director of our human capital management practice and we were really intrigued by the solution. So I guess to get things started, Josh, you mind telling us a little bit about your background, as well as PTO Exchange?

Josh Reinhard: Yeah, absolutely. I'm Josh Reinhard, I'm the vice president of sales here at PTO Exchange. We are a platform that allows employees to self-direct the value of their accrued, but unused vacation time for different needs, causes and experiences. Our co-founder Rob Whalen came up with the idea a few years back. He was working for Cisco at the time and when he left the company, he had a huge sum of unused paid time off that they ended up paying him out when he left the organization.

Chris Marren: Very cool. I didn't realize the backstory there on that, so that's interesting. So yeah, obviously it's a challenge I'm sure that a lot of folks face, and probably a lot of folks have the same "aha" moment in a way, but good for him for taking action on it. So in terms of, I guess, specifically, wow, I mean, thinking of the last year and all that took place, obviously people changing their schedules and plans, how has the events of the past year with COVID-19 really impacted the business?

Josh Reinhard: Yeah, it's been tough. One of the few, I think, silver linings of COVID for us is that it shined the light a little bit on how much excess PTO companies have sitting on their balance sheets. Because people don't have the ability to go on vacations like they normally would have, PTO requests were down 34% in 2020. Because of this, a lot of companies had to make hard decisions about what they wanted to do. Many of them allowed employees to carry more time into 2021 than they otherwise would have, and effectively kick the can down the road another year with that liability of paid time off sitting on the books.

Other companies we talked to kept a really strict policy and had employees really upset about the loss of the benefit that they couldn't take advantage of, but more and more companies that we're talking to became really interested in our solution, because it allows employees to get value from this part of their accrued compensation, while at the same time shedding some of the liability that's sitting on the books. For us one of the things that has been a silver lining of COVID, is that it really forced companies to take a hard look at their PTO policy and try to figure out is this an ongoing problem that we're facing, or is this something that's just short-term?

The interesting thing is that even pre-COVID, pre-pandemic, this idea of excess PTO was a major problem, I think it just wasn't getting the attention maybe that it is now. Because pre-pandemic, employees in the US just don't use paid time off the way that they should. The average US employee leaves over one week's worth of paid time off on the books every single year, and that equates to north of $155 billion of unused paid time off.

Now some of that gets lost, companies have use or lose it policies and employees can't carry it over, but the majority of it does get carried forward into a new year. So with the requests down 34%, that total was, again, greater than $200 billion in 2020. But while COVID shown a light on the problem, it's something that's been bubbling under the surface for a really long time. Once things go back to normal, it's not going to go away then either. So, it's been really great to see companies that are really taking a proactive stance in how they're dealing with their paid time off.

Chris Marren: Yeah, and I think it's an issue or a challenge, that, I mean, regardless of which demographic or age cohorts you're looking at in the workforce, it's something that's an issue for everybody. So I think it's got a broad appeal, I guess, is what I'm trying to say to employees, regardless of the demographics and age and experience in the workforce.

Josh Reinhard: Yes, that's right.

It's an interesting point that you bring up, because that's one of the things that we're really proud of at PTO Exchange, is that our solution is designed so that everybody can get value of it regardless of their age or their circumstance in life, kind of where they sit. A lot of companies that I talk to initially reach out to PTO Exchange, and they're interested in specifically our student loan debt part of our platform. They have employees that are dealing with student loan issues and how are they going to solve for this, and I think it's a noble cause for an HR and total rewards department to take on.

But when you're looking at a solution like that, it does only speak to maybe 25% of your employee population. Whereas with a solution like ours, for Millennials or Gen Zs who are struggling with student debt, they can certainly use some of their excess time to help pay down those loans. But for Baby Boomers who are maybe considering leaving the workforce, they can maximize their 401(k) or their HSA before they retire. For Generation X-ers who now have started a family, they can use some of their excess time to offset the cost of a trip that they're going to go on by using it for travel plans.

For employees that have nonprofits that they want to support, but they don't have the disposable income to write the check for that nonprofit that they'd like to, they can take a couple hours of time and make a donation to that nonprofit. So there's really a lot of milestones that employees hit over their course of their career, and part of the beauty of PTO Exchange is that we have solutions that hit each of those milestones so everyone can get value from it.

Chris Marren: Yeah, and you had mentioned I guess before, just obviously dealing with finance and human resources and some of the other initiatives that they have around benefits and trying to address the challenges of the employee populations. When you're talking with employers or initially introducing the concept, I know you work a lot with benefits consultants and brokers like us, but when you're talking to the employers themselves, are you generally talking to finance or human resources? Is it kind of like a joint audience?

Josh Reinhard: Yeah, I mean, typically our entry point tends to be with HR or total rewards folks, but the conversation's always going to include finance at some point. One of the best parts about PTO Exchange is that we act like a voluntary benefit in a couple of different ways. The first is that our solution is completely optional for the employee. So if they want to continue to use their paid time off the same way they always have, that's completely fine, and we understand that we're not going to necessarily have 100% participation. But when an employee does use our solution, they're the ones that absorbs the cost to make that transaction, and that's per IRS requirements.

So by doing that and by the employee absorbing the cost, again, it acts like a voluntary benefit, and we don't need to charge the employer any kind of a per employee per month fee. So if the HR team wants to move forward with PTO Exchange, they don't need to carve out additional budget to make it work. So when we're talking to finance, obviously most controllers and CFOs love to hear a solution like that, they're [inaudible 00:08:57] at this point with all the different benefits that are out there that cost a little something here and a little something there, but they're also the ones that are staring at this huge liability of excess PTO that's sitting on their balance sheet.

So if they can shed some of that and pay it out at a discount, again, which the IRS requires, they see us as a way to generate a positive ROI. So they also know that because of the way PTO works, it's a liability that naturally grows over time. So, if an employee earns 40 hours of paid time off when they make $50,000 a year, and they hold onto that PTO and they haven't used it and now they go through a couple years of year over year salary increases or merit increases and now they're making $60,000 a year, it becomes 20% more expensive to pay it out than it was when the employee earned it.

So, being able to pay out the PTO at a discounted rate before those year over year increases kick in is like a double win for finance. So we're talking to both sides of the house, but it really does become a win-win-win for HR, for finance and for the employee.

Chris Marren: Yeah, that's an interesting point. I have a question coming up, I guess, where we can dive into a little bit more about the technology and everything. So, I mean, transactionally and from a cost perspective, it's really that IRS mandated fee, so to speak, that's applied there and then you're able to provide the technology and the platform really for the employees to take advantage of everything. Interesting.

So, let me ask you. We've been talking about the fact that employees have the ability to exchange the value of their PTO. So, I guess can you speak to that a little bit? I'm an employee, let's say I've accumulated all this PTO, I decide I want to utilize it, exchange it in some way. What are my options there, or is that something that's dictated by the employer?

Josh Reinhard: Yep, so we have a number of plans that the employer can choose from, and the plans themselves really fall under three different categories. The first and most popular of the plans that we offer is around financial wellness. So within that bucket of financial wellness, employees can have options to contribute to their 401(k), contribute to their HSA, pay down student loans, or if they're currently furthering their education, can use it to make tuition payments, or employees can, if employers allow them to, can cash out some of their excess time.

Even within the cash out plan that we have, there are options for the employer. Some employers say, "We don't care what our employees are using this money for. They've earned this time, they can use it however they want." Other employers are saying, "We don't want employees to be using paid time off to go buy a new pair of shoes, but we will allow employees to use their PTO for certain purposes."

So in that kind of a cash out plan, there are predetermined categories that employees can use their time for. So think of things like medical expenses or home or auto repairs, unexpected bills that the employees tend to have. Now employees can dip into their paid time off, use a couple hours to reimburse themselves for the cost of those sorts of expenses. So, those are the financial wellness plans.

I should point out that 401(k) and HSA, because of the nature of the way that paid time off is earned comp by the employee, when it flows through payroll, it flows through on a pretax basis in the same way that a normal payroll contribution would. So, those are pretty popular plans with employees.

The second category of plans is around what we call social wellbeing, and that's the ability to donate to a nonprofit. Throughout our system, employees can search for any one of 1.7 million registered 501(c)(3)s, take a couple hours of their time and make a donation. If the company has any kind of matching policy, we can make sure the matching dollars are applied. Also, they have the ability to share paid time off with a co-worker.

So that was something that became particularly relevant during COVID, where some employees burned down all of their paid time off, because they were either affected by COVID or someone in their family was, and now they were forced to take unpaid leave. Another colleague could share some of their time into a leave sharing pool, and then the first colleague could receive it, get a couple extra hours that they need and now could get paid for that time off. So, that was another plan that we did see an increase in interest over COVID.

Then the last type of plan is more of a marketplace, specifically around travel. So our system integrates with Priceline, and employees can go in, book some travel, the vacation they'd like to go on, and use some of their excess time to offset the cost of hotels or other travel-related expenses to enable them to go on a vacation maybe they otherwise couldn't have afforded.

Chris Marren: Okay, so main buckets being financial, social and marketplace, let's call it. Can the employer, I guess, customize them? Do they have to offer all three or could they...

Josh Reinhard: Yeah, employers can customize down to the plan level. Even within financial wellness, they can just say we're only offering the 401(k) and student loans. So, it is entirely customizable in how the client wants to roll it out. We encourage our clients, walk before you run. You can start at phase one of this plan, can just be 401(k) and student loan, you can add some of these social wellbeing plans down the line. Maybe as part of phase three, you're going to add the travel option or the cash out option. So, it is entirely customizable in how the client wants to set it up.

Chris Marren: I think I even saw potentially in one of the case studies that you had, there's an employee, I mean, they have the ability as well to have a minimum requirement, PTO remaining, so to speak. So, they want the employee have a minimum 40 hours still in their bank so they can kind of help safeguard the employee in that way too, so that people aren't just working all the time and never taking time off.

Josh Reinhard: Absolutely. We, again, encourage all of our clients to have some kind of a policy set up like that, some minimum number of hours that are protected. A, you don't want an employee burning their balance down to zero by making 401(k) contributions, and all of a sudden they get sick and they have no PTO. But also in certain parts of the country, there are required sick leave laws and you need to protect some of those hours from a compliance perspective. So we do encourage our clients to set that up, employees need to have a minimum balance.

You can also set up the policy so that in any given year an employee can only exchange a certain amount of time. So, maybe you have a minimum of 40 hours that an employee always needs to hold onto and a maximum of 80 hours that they can exchange on our platform in any given year.

I think one of the key points that we always talk to clients about is we're not trying to eliminate employees taking paid time off. We understand the value of refreshing, recharging and coming back to work ready and motivated, it's that excess PTO that employees aren't able to use that we're really trying to solve for.

Chris Marren: Gotcha. All right, so let me ask you here, in the last couple minutes, I guess we'll look to wrap things up a little bit, but one of the last questions I had was just in terms of from the employers perspective. You kind of talked about how it's a fairly light lift for them, I guess, but I mean, you're really providing the platform. Is there anything that employers need? How challenging is it for them let's say to implement the platform, utilize it? Is there a significant amount of lead time required?.

Josh Reinhard: No, our typical implementation timeline is anywhere from four to six weeks. It can be shorter or potentially longer depending on the resources that the client has available, but basically all that we need to do is we integrate with the payroll systems of all of our clients. We work with basically all of the major payroll providers and a lot of the smaller ones as well, and we create a transfer of flat files.

So, from the payroll system into our system that has things like PTO balances and pay rate and year to date 401(k) and HSA contributions, that gets imported into our system. Employees make transactions on the platform throughout any given pay period, and just before payrolls run, we push a file back into the payroll system for all of the transactions that happens.

There are earnings and deductions codes that are associated with each of those transactions that have already been created. Then payroll gets run, we receive a refresh of the data back from the payroll provider, and that's kind of like the 360 degree loop that the data makes. It's pretty easy, and once the system is set up after that initial four to six week period, it's really hands-off for the client. They don't need to do any kind of manual entries or overrides of the system, everything happens automatically through the file feeds between our system and their payroll provider.

Chris Marren: Gotcha. I think you alluded to this then, so, I mean, this is something that can be done without regard necessarily for their plan year. In other words, it doesn't have to be something that lines up with their open enrollment period?

Josh Reinhard: Yeah, not at all. In fact, most of our most successful launches are when PTO Exchange is introduced outside of OE. It's not bundled into one of the many things that the employees are seeing and it kind of gets lost in the shuffle, it does not matter when you roll PTO Exchange out. So we're happy to do it off-cycle, we're happy to do it at the beginning of the year if that's what the client wants to do best, but there's no requirement on our side.

Chris Marren: Gotcha. Okay, good to know. Well, this has been great. Karina, I don't know, do you have any questions before we wrap up?

Karina Veloso: Yeah, I just had a couple questions. Well, first of all, Josh, thank you so much for taking the time to speak with us, we really appreciate it. Just a final couple of questions. The first one being, what is your outlook on and what are your goals for the remainder of 2021? Then second, where can our listeners go to learn more information about PTO Exchange?

Josh Reinhard: Yeah, our goal really is just to increase awareness that this is a benefit that's out there. I think there's a lot of companies that are struggling with large PTO balances, especially with COVID, and are really re-evaluating what their total rewards strategy looks like, and they don't even realize that there's a solution like ours that's out there. So, our biggest goals in 2021 and heading into 2022 is just to turn the light on a little bit and make sure that companies are aware, and our channel partners also are aware that PTO Exchange exists and is a viable solution.

In terms of goals outside of that, it's really about, if we can, shortening the implementation cycle. So as we do more implementations with more and more payroll providers, we're trying to reduce some of that friction and get that four to six weeks down to two to four weeks to make it easier to turn on. Those are the sorts of things that we're really focused on, and then adding additional options for clients that are looking for more than what's on the platform today.

We have plans throughout the rest of the year to add things like 529 options for employees, adding options where employees can use paid time off to pay for the premiums of voluntary benefits, emergency savings accounts. Those are the sorts of things that are on our product roadmap that we anticipate rolling out later on in the year.

But for anyone that's interested in more information about PTO Exchange, our website is You can always reach out to me directly, my email address is Happy to answer any questions that you may have, or just be a resource for companies that are looking for options in how to attack their PTO strategy.

Chris Marren: Absolutely. Yeah, and we're really excited about the partnership that's been established with the Benefit Advisors Network, and we're fortunate to be a part of that organization. So, we're looking forward to working within the coming months as well, hopefully and some opportunities here. So Josh, this has been great. We really appreciate your time as Karina mentioned.

Josh Reinhard: Thanks, Chris and Karina. Appreciate it.

Chris Marren: Thanks.

Thank you for listening to the For the Win podcast, to learn more about current HR trends, market forces and concepts that help employers build strong, sustainable businesses.

Build Your Company's "Reputational Excellence" with PTO Exchange

Companies are facing a dilemma about how to address employees' reluctance to take time off.

The demand for talent means many companies will not be able to fill and retain skilled positions as the economy rebounds after COVID. PTO Exchange creates a highly differentiated benefit to retain key talent and enhance financial security, while allowing companies to reduce a ballooning PTO liability.

This is a notable time with many companies making bold adjustments to their PTO strategy and trying to find new ways to help their employee community bridge the changes that are affecting their lives.

If PTO donations, leave-sharing, cash-out or one of our other service plans are something that can help your organization navigate through this situation, we are here to help.

Learn more about the PTO Time Bomb and what your organization can do to get ahead of this freight train of surplus PTO.


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Published on Apr 27, 2021 by Gregg Makuch

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