Sorbet has launched a platform that lets employees access the value of their unused paid time off (PTO).
With this on-demand PTO cash advance solution now available in eight states, employees can access the cash value of PTO as they accrue it, rather than waiting until they leave the company, the FinTech startup said in a Thursday (June 1) press release.
“With rising prices and a looming recession, Sorbet helps employees by unlocking extra compensation that they wouldn’t be able to access otherwise,” Sorbet CEO and Co-founder Veetahl Eilat-Raichel said in the release.
After receiving an application, Sorbet determines the value of the employee’s unused PTO payouts, delivers the money on a prepaid debit card and charges interest at an annual percentage rate (APR) of 9.99% to 18%, according to the press release.
The employee makes interest-only payments to Sorbet during the advance term and then repays the full amount when leaving the company and receiving their PTO payout or after two years, whichever comes first, the release said.
This offering is now available in Colorado, Florida, Illinois, Massachusetts, New York, New Jersey, Texas and Virginia, and will be expanded to other states this year, per the release.
Sorbet’s solution provides an alternative to the payday loans and earned wage access solutions used by low-income workers and the borrowing against a 401k used by high-income workers, per the release.
“There is a massive opportunity for the gap in between to be offering a much-needed financial benefit by advancing earned, unused PTO,” Eilat-Raichel said in the release.
PYMNTS research has found that employees want more from payroll — including financial wellness benefits — at a time when the cost of living is rising and their pay is lagging behind.
As a result, banks are increasingly looking to add early wage access and other enhancements designed to boost customers’ financial well-being, according to “The Rise of Digital and Early Access Compensation,” the November 2022 edition of the “Money Mobility Tracker®,” a PYMNTS and Ingo Money collaboration.
The demand for financial wellness benefits comes at a time when even some high earners are living paycheck to paycheck.
Forty-nine percent of individuals and households earning more than $100,000 annually are now living paycheck to paycheck—a percentage that is up from 42% a year ago, according to the May edition of “New Reality Check: The Paycheck-to-Paycheck Report,” a PYMNTS and LendingClub collaboration.
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