More than half of Americans do not use all of the paid time off granted by their employers, leaving 768 million unused vacation days in 2018, according to a study by the U.S. Travel Association. A Seattle-area startup that allows employees to monetize their paid time off sees that as an opportunity.
PTO Exchange announced fresh funding Tuesday to continue to scale its product, which allows employers to compensate their workers for unused time off. PTO Exchange raised a $3 million seed round from WestRiver Group, a collective of investment funds based in Kirkland, Wash. It’s the first major funding round for the 11-person startup, which launched in 2013.
“This newest round of funding will go directly to continuing to grow the number of employees and employers we serve today, while building the solution to deliver our vision that benefits are not a one size fits all,” said PTO Exchange CEO Rob Whalen in an email.
Companies that use PTO Exchange’s software allow employees to trade their unused vacation time for cash, loan payments, and other expenses. The startup is based in Woodinville, Wash., a city northeast of Seattle.
The seeds that would grow into PTO Exchange were planted when Whalen was working at Cisco Systems. He had accrued more than 240 hours of paid leave in less than five years. When he left Cisco, the company paid him $30,000 for the vacation time he didn’t take.
“We are firm believers that [PTO] is an earned wage and individuals should be able to self-direct it for what matters most to them, instead of having to wait for companies to pay out the benefits during transition or termination periods,” Whalen told GeekWire in March.
Whalen co-founded PTO Exchange with Todd Lucas, the company’s CTO, six years ago. The software costs companies $3 per employee per month, with lower rates for larger customers. Employers also pay a 3-to-5 percent fee per transaction. Customers include mid-sized to large companies.
Historically, paid time off is a benefit attached to white-collar jobs, leaving low-income workers with fewer options for travel or family emergencies. But as more work becomes flexible and freelance, thanks to the gig economy, a new debate has emerged over how workers qualify for benefits. Lawmakers across the country are considering portable-style benefits that follow workers regardless of how they make their living. It’s an approach embraced by gig economy companies, like Uber.
PTO Exchange is exploring how its platform could be used by gig economy companies. The company plans to eventually launch a product that will allow gig workers to access benefits like traditional employees.
“We are proactively tackling the gig economy benefits challenge, both in terms of the technology and the government policy needed to make this happen,” Whalen said. “PTO Exchange believes this is critical for the gig economy as it continues to thrive as well as for the stability and well being of American households.”