Another Big Employer Benefits Problem: Employees Not Taking Earned PTO

There’s no shortage of data finding that paid time off (PTO) is one of the most popular tried-and-true employee benefits.

The 2024 SHRM Employee Benefits Survey, for instance, found that paid-leave benefits are tied with retirement benefits as the second most important benefits type, with 81% of HR leaders saying those benefits are “very important” or “extremely important,” behind only health care benefits. Another employee survey by the Pew Research Center found that most workers value PTO even more than having employer-funded health insurance.

But despite the importance of the offering, a new report reveals a problematic finding: The majority of workers are letting their full vacation benefits go to waste.

In 2023, 62% of workers with PTO did not use all of their vacation time, letting a third of it go to waste, according to a new report from fintech company Sorbet. That figure is climbing at an alarming rate, the report found, just shy of doubling from four years ago.

Work culture, remote work, and financial pressures are the primary reasons why employees are forgoing their paid time off, the report found: 63% of the more than 1,500 workers surveyed said it’s harder to take time off when working from home; 55% feel pressure from their employer to not take time off; and 54% said travel is too expensive.

About 5.5% of U.S. workers did not take any PTO in 2023.

Employees not taking all of their PTO is essentially making them lose out on actual compensation, said Veetahl Eilat-Raichel, co-founder and CEO of Sorbet. The average U.S. employee holds nearly $2,953 worth of unused accrued vacation days. All told, among all U.S. workers, those days equal about $312 billion.

“Unfortunately, in the U.S., we tend to look at vacation days—a benefit that makes up a portion of our compensation package—in hours and days and not in dollars and cents,” she said.

Under a normal PTO structure, employees who don’t use their time off typically are able to get that cash if they leave their employer.

Younger and remote workers don’t take as many vacation days as their counterparts, Sorbet found.

Sorbet’s data echoes other similar findings. A Harris Poll report earlier this year found that most employees (78%) do not use the maximum amount of PTO allowed by their employer, with the average U.S. worker taking 15 paid days off last year, despite 49% being allowed more than that by their employer.

It also comes during another problematic PTO trend—that when employees do take time off, they often are working. An April Harris Poll found that even when workers did take time off, 60% of respondents said they struggled to fully disconnect from work, 86% said they would check emails from their boss, and 56% took work-related calls. Nearly half said they felt guilty about taking time off in the first place. And another survey of workers from online learning platform ELVTR found that a large majority of employees (68%) admitted to working during vacations.

Both are alarming PTO trends, experts said.

“Constant connectivity, especially during PTO, does not allow the employee to step back from their jobs to truly rest and decompress,” said Nicholette Leanza, a therapist at mental health provider LifeStance Health in North Royalton, Ohio. “This will more than likely lead employees to feel burned out and stressed out, which will have a direct effect on their mental health by increasing stress and anxiety and even the potential for depression.”

The PTO findings serve as a warning to employers, Eilat-Raichel said—not only because their employees are not using all of their allocated time off and, as a result, are at risk of burning out, but also because it means that the “most expensive and generous benefit they provide their employees is underutilized and underappreciated, and therefore has a very low return on their investment.”