“With rising prices and a looming recession, Sorbet helps employees by unlocking extra compensation that they wouldn’t be able to access otherwise,” says the company
U.S./Israeli fintech startup Sorbet has launched a platform that lets employees access the value of their unused paid time off (PTO) on demand rather than waiting until they leave the company.
The new PTO cash advance solution is now available in eight US states: Colorado, Florida, Illinois, Massachusetts, New York, New Jersey, Texas and Virginia. It will be expanded to other states this year, according to the press release.
The solution works this way: Sorbet buys out PTO liabilities from employees and refinances these liabilities for employers. The company receives an application, determines the amount of the employee’s unused PTO payouts, and transfers the money to a prepaid debit Visa card incurring interest at an APR between 9.99% – 18%.
The employees make interest-only payments to Sorbet during the advance term. They should later repay the full amount either when leaving the company and receiving their PTO payout or after two years, whichever comes first.
The benefit for employees is that they can “spend” unused PTO value on offers and other types of deals, while employers get far more control over the PTO payout process and the ability to forecast ahead.
As the cost of living crisis puts extra pressure on everyday spending, on-demand PTO payouts may become a viable alternative to payday loans and earned wage access solutions or borrowing against a 401k.
Veetahl Eilat-Raichel, Sorbet founder and CEO, said: “It’s clear that we’re in the midst of a tectonic shift in employer-employee dynamics and with inbound global interest exceeding our wildest expectations…”