Americans are known for being workaholics, and nowhere is this more true than in the high-pressure, fast-moving world of the start-up. Increasingly, though, science shows why never-ending workdays, working weekends, skipped vacations, and always-connected employees is unhealthy for both individuals and the companies that employ them.

Should employers fight workaholism head-on by giving employees cash incentives for taking time off? One start-up is doing just that. The contact management company FullContact, gives employees $7,500 once a year if they'll agree to take a (paid) vacation, during which they will do no work and disconnect completely from the company. With 53 full-time employees, this initiative costs in the neighborhood of $400,000 per year.

It's money well spent, according to CEO Bart Lorang. "It's an investment into the long-term happiness of our employees, which in turn leads to the sustained growth of the company," he explains. He started the program in 2012 and says he plans to continue it as long as that remains true.

Besides having happier employees, FullContact gains much more than it spends to provide "paid PAID vacations," Lorang says. Here are just some of the benefits:

1. Greater productivity.

Mounting evidence suggests that taking time away from work benefits brain function. And many people report having their best ideas while away from work--something you may have experienced yourself. Gaining that increased productivity and the benefit of those off-hours ideas benefits FullContact, as it could any company.

2. A happier workplace.

For FullContact--whose motto is "be awesome with people"--having a happy workplace is a high priority. "We've always had a big emphasis on quality of life," Lorang says. "It's why we've stayed in Denver, it's why we have 'Truancy Days' where we go play paintball, go to Rockies games, or otherwise enjoy the beautiful place where we live." Having a healthy, happy workplace culture ultimately benefits FullContact, he adds.

3. A fantastic recruitment tool.

This is one reason FullContact's investors are fully on board with the concept, Lorang says. "They understand the bigger picture," he says. The program has been mentioned in both the Wall Street Journal and Fast Company, he adds. "Of course our employees love it too. Their bragging to their friends and family about it always draws a bit of attention."

4. A powerful retention tool.

Besides helping with recruitment, paying employees to take vacations helps motivate them to stay at the company once there. This is where the policy truly pays off, Lorang says. "The math is solid," he says. "What does it cost to bring on a new employee, train them and get them completely up to speed in a new position that you've had to fill because you've burned out the last person who held it?"

Add up the cost in dollars or time of going through applications, time spent in the hiring process, and the first three to six months an employee typically spends getting up to speed. "I think you'll find the policy is suddenly not as expensive as it may seem," Lorang says.

5. No 'heroes.'

Perhaps the biggest benefit is that paying people to go on vacation ensures no individual employee can ever become indispensable. Just as there are helicopter parents, Lorang says, helicopter managers and other zealous employees can start thinking and acting as if their presence is required at all times--because they're the only ones who can deal with a key customer, a complex process, or other business challenge. Making themselves available to answer questions or take phone calls no matter where they are can make such employees feel like heroes. But that isn't heroic at all, as Lorang points out. It creates a single point of failure that weakens the company.

One of the biggest lessons from FullContact's vacation policy is to ensure there are no longer any such heroes. "It's something we didn't see at first, but it became painfully obvious the first time that we missed an important detail and had to scramble to get it fixed," Lorang says.

Today he says, the policy helps keep employees honest about sharing knowledge and documenting what they do. "Because we have to be acutely aware that a FullContact employee will be completely off the grid, it forces us to make certain that their areas of responsibility are covered before it happens," he says. "It helps us spot potential problems before they arise."