Rethinking Accrued Paid Leave with Rob Whalen of PTO Exchange | Soar Payments LLC

Rethinking Accrued Paid Leave with Rob Whalen of PTO Exchange

Paid leave is an important benefit, but navigating how and when it’s used can become more of a headache than a perk for both employees and employers. In this episode Rob Whalen, CEO and Co-founder of PTO Exchange joins us to discuss a new and innovative way to allow employees to self-direct their accrued benefits to the vehicles of their choice.

Payments & Fintech Insights In This Episode

  • The role of PTO in the benefits structure of a company.
  • How expanding the use case for benefits increases employee engagement.
  • The inherent problems that arise from unused PTO.
  • The importance of easy integration and implementation of benefit software.
  • And so much more!

Episode Transcript

Heather: Hi, everyone. Welcome to PayPod. I’m your host, Heather Bodie, and today we’re going to be talking about ways to rethink how we use our accrued paid leave. Joining me today to help guide us through this new landscape is Rob Whalen, co-founder, and CEO of PTO Exchange, a benefits platform that transforms unused paid time off into so much more. Rob, welcome to the show.

Rob: Heather, thanks for having me today.

Heather: Absolutely. So, I want to get started by exploring your career, your path into fintech. Tell me a little bit about yourself and how you got into the industry.

Rob: I think as entrepreneurs, this is my third company…actually, it’s my fourth. That’s another thing about it, I just look at problems, right? And I think a lot of entrepreneurs do that. And most of the things that I’ve done, when I started the company, I was actually outside the industry. My background is in accounting, so I view the world of business from an accounting lens and a financial lens. And started early on selling semiconductors, so computer components after accounting, mainly because my uncle, who is a serial entrepreneur, told me to get into technology.

And then I went from there, built a software company when the internet started, around tracking samples of computer components for engineers. Then I left there and built a real estate software company. And then I went to Cisco and when I left Cisco, I got paid out a lot of money when I didn’t use the paid time off that was accrued, and I realized that there was an opportunity here to give people access to those funds prior to leaving the company and separating from the company, whereas the company would benefit as well as the employee would benefit in that happening.

And that was kind of a light bulb that came on. From that moment, we’ve learned a lot. But really in a nutshell that’s been my career, in and out of corporate but mainly looking at my world and trying to solve problems, and then starting companies throughout, and some were good and some have failed. Not everything was rosy.

Heather: I don’t know many founders who have had an only-rosy experience. So, I think it takes incredible courage and bravery and vision to even be willing to take that step in the first place regardless of whether or not it turns out, “exactly as you planned.” So, thank you for trying to solve problems. We need people like you in the world.

Personally, I haven’t been in a traditional workplace environment for many years as a contractor, but I know from my friends who are, the conversation around PTO is constant, and it’s always how much they have left, and when and how can they use it, and also rolling time over, use or lose it policies. So tell me a little bit about how this works. You talk a little bit of the value statement of why it’s important, you know, having access to those funds in ways benefits both the employee and the employer if you don’t wait until that separation, but how does PTO Exchange make this possible for companies to create the system that their employees can take advantage of?

Rob: Yeah, no doubt. So, paid time off is a really unique thing and, Heather, we didn’t know this when we started the company. We learned this along the way. But paid time off is very interesting. It’s the last accrued deferred comp plan that sits outside of this law 409A. So you need to understand some of the regulatory environment before you start moving the dollars from PTO banks into something else.

And so there are some things that if you’re not doing it correctly as a company, you run afoul of certain regulatory problems. And this is something we spent…boy, we spent a lot of time learning this. Back in 2015, I went back to speak to the Joint Committee for Taxation. But in essence, what we do is we allow the employee…I should say, we sell to the employer, but we allow the employee to self-direct a certain amount of their PTO. We want people to take time off, but there’s this one week of time usually that’s left on the books that’s not utilized, and we allow them to use that week and self-direct it, to put it into their 401(k) if they want to invest in their 401(k), and maybe they haven’t been putting enough into their 401(k), their HSA, student loans, things like that. So we let them self-direct for a benefit that we think of it as stress relieving. We allow them to self-direct it into things that are more important to them. So, very much individualizing the benefits.

And that’s how we do it, right? We make sure that the company is meeting all regulatory environments, and then we integrate to the payroll, and we allow this employee to say, “I want to take 20 hours and put it into my 401(k). I may want to take two hours and put it into a nonprofit,” things like that.

Heather: That’s incredible. So you said the magic word, integrate. I have to ask, what is your approach and philosophy toward integrations? I know every company seems to be using their own version of some sort of legacy software platform, so their tech stacks all look different. So, how do you go about integrating with what an individual company uses for payroll processing and that sort of tracking?

Rob: Exactly. So, we integrate to the payroll systems and/or into the HR systems. And those systems are pretty normalized from across the board. And so we usually use a flat-file through a secure FTP for integration. And what we found interesting… We also do APIs, Heather, so we’ll also do an API as well and we have our own API for integration. But what I have found interesting, the larger the company, the less likely they want to do an API. They’re still doing some of the old flat-file, and that’s just the way they like to do it, whereas the smaller companies, they seem to lean on the APIs a little bit more, which is interesting. But we work with all the payroll systems, so the ADPs, the UKGs, the BambooHR, Workday, things like that, and we pass data back and forth, so we know how many hours you have accrued on the books, we know your pay rate, things like that. And then we put policy around it, Heather, so that people don’t just spend all their paid time off, they can only do certain things with it. And then that policy is built by the employer, and that’s how we do it.

Heather: So those policies are built by the employer in conjunction with your company when building out the platform?

Rob: Benefit?

Heather: Yeah, the benefit.

Rob: Yeah.

Heather: Fabulous.

Rob: So, we have companies, very large companies, that say, “Hey, we don’t want our employees to cash out their PTO. We only want them to use it for financial wellness and/or for social well-being, which is giving to a nonprofit or sharing with an employee. So, we will only turn those plans on or that functionality on within the system so that the employee can only do and access those things on the platform. And then we put other rules around it. Like, maybe you have to have 80 hours accrued before you can spend time off. We also have the ability to say, “Hey, we want our employees to take time off. So, you actually have to take two weeks of time off before you can use the system.”

Heather: So people can’t just squirrel everything away and never take a single day off?

Rob: And/or spend it, right? You don’t want people just to spend their time. You want them to use that accrued benefit in a way that is good for them and that’s what companies are trying to do and that’s what they can do through the platform.

Heather: Have you had any pushback? I mean, change is always uncomfortable, especially with these sort of new ideas being incorporated to long-time approaches to an idea, right? That like paid time off looks this one way and functions this one way and you take it or you don’t. Has there been any sort of pushback and how have you overcome that?

Rob: Yes, there is pushback. Like when you’re trying to develop anything as an entrepreneur, there is pushback, and I’ll give you an example. When we first started, we went into a company…gosh it was…we were talking to a company and they were going to sign up with us. We’d signed an NDA with them and all of a sudden they came back and said, “We can’t do this.” And we said, “Why? It seemed like we’re having great conversations.” And they said, “Well, we make $18 million of people not using their PTO and we don’t have to pay it out, and our chief financial officer budgets for that loss.”

And what that’s telling you, Heather, is that that company is really stealing or taking that time away from the people that have earned it, because PTO is an earned accrued wage, and they’re pocketing it and putting it in the shareholders. This is what’s been going on in the industry, that people don’t use their time and so they use it or lose it, that you had stated in the beginning of the podcast here. The lose it actually benefits the company. And so a company that says, “Oh, we’re going to put this in.” They go, “Well, now everyone’s going to use all their PTO, and that money we were saving is going to be gone.” So this one company says, “This is going to cost us $18 million.” And I kept thinking, “Really, that’s the way you’re looking at this?” But they weren’t the only ones.

And so what we’ve…obviously during the great resignation, there’s been these ads of employees having more power, but what we also found was that there’s really some incredible companies out there that really do care for their employees, and believe that this is an accrued wage, and believe that their employees should have access to it, and those are the companies we’re working with, the companies that are really good to their employees.

Heather: I love that.

Rob: And those that are…who will look at us and say, “Wow, this is a great benefit. We’re adding more flexibility to our employees and they’re able to do something different with this accrued wage.” I think what also I might say is that this thing that you see, this loss or this gain to the shareholder, to the CFO, that I’m going to make $18 million, this is also why unlimited has come about, whereas you don’t have to track it and accrue it. And this came about because California put in a law that said, “If you accrue PTO, you have to pay it out of separation.” And that’s what Cisco did with me, right? They’re a California-based company. If you don’t accrue it and you call it unlimited, then you never have to pay it out because it was never accrued.

So, it’s kind of the unintended consequences of a well-intended law. And that’s how Netflix does it, and that’s how a lot of unlimited paid time off companies are making money on the backs of their employees. And it’s a substantial amount of money.

Heather: Yeah, specifically when the…and I know it’s different at every company, but I’m talking about a sort of stereotypical or cliche work environment where, yes, you have unlimited time off, or in some cases, even paid time off, but we dare you to take it. Like you’ve got two weeks left of the year, you got to take these five days, but don’t you dare take those five days, because we’ve got to deliver XYZ. So, it ends up becoming the lose it or the, yes, you have unlimited time, but you don’t actually have unlimited time because we need to see you here five days a week.

Rob: Correct.

Heather: So, yeah, it’s fascinating.

Rob: You don’t have unlimited time, to your point. You just don’t.

Heather: You absolutely don’t. But what I really like about what you just shared is that I imagine that something like, I don’t know, if it’s a happy accident, I don’t know if that’s quite the way to speak to it, but in the early days of building any sort of company, there can be those feelings of desperation of anyone who will buy the product, anybody who wants to be a customer of ours, we want to have.

And you sort of navigate over time that like, “No, actually, this kind of person is a good fit.” What I heard you say is that the people who want to be your customers are the people you want to have because they value their employees’ benefits and taking care of them and creating that sense of loyalty and the feeling of being taken care of. So, I think it’s pretty unique.

Rob: It is. And I think in today’s employee environment and the different generations…so, there’s five generations in the workforce today, which is the most we’ve ever had. And being able to have a benefit that is flexible enough to add value to each one of those generations is critical to attracting and retaining. And I’ll give you one little example. You could be an adult coming out of college, and you get these three weeks of paid time off, but you have student loan debt, and you’re like, “I don’t want to take this time off. I don’t have any money, first of all, because I’m dead poor.”

Heather: Right. What am I going to do, sit in my apartment? Yeah.

Rob: Exactly. It’s a staycation in front of the TV. That doesn’t really work well. “But what if I could take that week and help pay down my student loan? Now, that would be more stress-reducing than going on a week of vacation that I can’t afford.” And that’s kind of what we’re talking about. There are these life’s transitions and you and I have had them, that are different for everyone. And if you can have a benefit that meets your employees where they’re at through those small transitions in life, whether it be emergency, healthcare, 401(k), 529, kids to college, retirement, all these things, the timing is different for everyone. So, having a benefit that meets somewhere they’re at is important. And that’s what I believe we’re doing.

Heather: You mentioned the great resignation, and I feel like I would be missing a big part of this conversation if I didn’t bring up the way that work has changed in an enormous way over the past two and a half years. The shift not only in workplace culture but also workplace usage, like the physical location of work. So, what do you see for the future of PTO policies? You know, having you mention this sort of unlimited time off becomes no accrued benefit, but I know so many people are going that way, how do you think companies are going to adapt from a PTO perspective with work looking so different?

Rob: So, my view on work is that it’s like everything, it swings left and right. And I think we swung a little bit far to one side.

Heather: Our swing went up over the swing set.

Rob: Yeah, everyone left the office and now they’ve realized, oh, I can work from home. But for a company, the productivity probably has gone down. I’m being very rational about this. So, I do think that there is going to be a swing back to the office of some level. I do think that flexibility is going to be kind of a standard. There’s going to be two days out of the office, three days in the office type thing or something like that. There’s just going to be more flexibility in that. Benefits are going to start mimicking some of those movements. PTO is going to look more like a 401(k) in the future. And 401(k)s go with you wherever you go.

So, I think that paid time off will just be yours to go…to accrue, to take with you. It will be portable. It can’t happen today, but I believe the future is that a lot of our benefits that we have today will be portable and look a little bit like…to address the gig economy and the W2 economy at the same time. We look at the gig economy, too. We look at how do you provide enterprise-like benefits for an individual gig worker or 1099 worker, we call them gig today, but they’re really 1099 workers, and how do you allow them to have enterprise-like benefits so they can have the tax benefits that a corporation gives their W2 employees? And we see that as a big opportunity for us, building this unified benefit platform that provides you with a source of funds that you can utilize.

Heather: So, speaking of big opportunities, what’s next? What is right on the horizon for PTO Exchange? Are you adding any new outlets for…? Give me the inside scoop. What’s exciting and new?

Rob: So, a couple of things that we’ve done lately, because the platform is really flexible and has these policies, we actually built what we call a life planning account, which is where companies will give every employee a certain amount of money, and then they’ll be able to direct that to, you know, like social well-being, mental well-being, or for gym memberships, things like that. So, they’ll just give them a set of funds that they can, you know, self-direct or utilize for different things.

So along with paid time off, being able to self-direct that, a company could then say, “Hey, I don’t want my employees to do PTO, I want to do live planning accounts.” And we do this for a number of customers today, so we see that happening. We see 529s plan coming out. So that’s something we’re going to be coming out with, along with building out more of a marketplace. But the exciting thing for me is really, I think the world is in a place right now where there’s this new opportunity with Web3 going on, and I think everyone’s looking at the crypto world and the decentralization.

And I think what you’re seeing right now with the downturn of the crypto is that it looks like the early days of Web 1.0 of ’94, and I think you see this downturn and a lot of companies will be washed, but there’ll be a lot of great companies that come out of this that are delivering solutions that are very individualized because Web3 gives you that capability and it gives you ownership of your data and the things that you do. So, we’re working a lot with ideas around Web3 right now, and we’ll be announcing some things, I think, in the very near future that will be kind of game-changing.

Heather: Ooh. I will keep my eyes open.

Rob: Yeah. And it’s kind of fun to see, but I’m really, really excited about what the future holds for products and technology. And I think Web3 is going to be embedded in almost everything that we do, especially in the fintech world, but not just in the fintech world. I think it’s going to be embedded into the security world. I think it’s going to be embedded into our personal data. I think that there’s a lot of exciting things to happen in the very…you know, 5 to 10 years that’s really gonna be game-changing for us as a society, too. That’s where I think we’re going.

Heather: I love it. To close out our time together today, I’d like to ask folks, especially individuals like you, like you said at the top of the call, you’ve started three, no, four companies and that you’ve been on this journey in some way multiple times throughout your life. For people who are looking to start a career in fintech or just general business advice, what’s the best piece of business advice you ever received?

Rob: So, my business advice… I had some really incredible mentors, both my father and my uncle, who continually failed and built companies, so I was witness to some tragedies, but also some incredible strength that you saw these individuals then get up the next day and do it again. I think the advice for anyone who’s going to be an entrepreneur is failure is the norm. And I think that you do have a few successes that keep you going, and you have to get used to that. You really have to get used to being in a place that’s very lonely, but committed to what you’re trying to accomplish and listening very clearly to the customers.

And you know, the customers aren’t always right, but they are telling you what their needs are. And that’s where you need to find yourself developing your product, in alignment with that. I was listening to one of your podcasts, Heather, TeamPay, and, you know, that CEO is very right in line with what entrepreneurs have to have. They have to be very committed, persistent. You have to have a real will to continue on when things are really, really, really bad because they’ll get that way. But I think fintech is a great space. There’s a lot of stuff going on in fintech and there’s a lot of great innovation going on in it mainly because the banking systems and the payment rails are pretty old and they need to be upgraded. And you see that in crypto, right? You see crypto kind of changing the game and some of these thought processes.

Heather: Yeah, that we were craving, craving some sort of update. We need some sort of innovation around it. Absolutely.

Rob: We do and only startups can really create that innovation, people that are coming from outside of the industry. And that’s usually where innovation happens, somebody who was not in the industry and is looking at it differently.

Heather: And I appreciate your perspective on failures. And I don’t know if…I’m continually looking for a different word than failure, because there’s absolutely no way that any of those failures didn’t teach significant lessons that they carried with them onto the next endeavor. So, is it a failure when you leave with more than you came in with? Not entirely.

Rob: I kind of always say this, but I would rather fail than not try.

Heather: Yes.

Rob: And that is something that, one, we need to teach our kids. We need to teach kids that failure is, like, really good for them. One, it makes them emotionally and mentally strong and it gives them the capabilities that they need to, when life gets tough, that they can overcome things. If we don’t let our kids fail and we don’t promote failure…I’m not saying promote it, but make sure that they’re really pushing themselves so that they do fail.

Heather: That there are opportunities for failure. Absolutely. So you have the capacity to get used to that and learn to cope and manage and move forward. Absolutely.

Rob: Yep. I always have this thing, Albert Einstein had this thing and I had it up on my wall for so many years. I don’t have it there now but the problems that face us today cannot be solved at the same level of thinking we were at when we created them. And that is if you live your life in that manner, knowing that every problem we solve is going to turn into a problem itself, we need to continue to keep innovating.

Heather: Rob, thank you so much for joining me today. If folks want to get in touch with you or learn more about your company, where can they find you?

Rob: Yeah, they can find me on LinkedIn, obviously. They can link in with me there. They can also find me at and you can email me at as well and get a hold of me that way. But would certainly like to talk further to anybody that wants to continue the conversation.

Heather: Again, thanks for joining me. I will keep my eyes and ears wide open for upcoming exciting advancements. I’m so, so grateful that you took the time to chat with me today. I really appreciate it. Thanks, Rob.

Rob: Heather, thanks for having me. Take care.

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Industry Spotlight

PTO Exchange

PTO Exchange is a benefits platform that turns unused paid time off (PTO) hours into liquid assets that can be converted into things employees value – retirement accounts, student loan repayment, travel awards, charitable causes and more… PTO Exchange has been featured in Bloomberg News, The Washington Post, Fox Business News, HR Executive, SHRM (Society of Human Resource Management), GeekWire and more.