What Is Full-Time Equivalent FTE?

But as mentioned, the full-time equivalent employee calculation can vary depending on what you are calculating the FTEs for. Like we mentioned, some employees count 37.5 to be the standard workweek, which is the number of hours actually worked when you exclude the breaks. Full-time equivalent employees equal the number of employees on full-time schedules plus the number of employees on part-time schedules converted to a full-time basis. An industry’s full-time equivalent employment will be less than the number of its employees on full- and part-time schedules, unless it has no part-time employees. ALEs are required to offer affordable health coverage of minimum value to all full-time employees and their eligible dependents.

When you apply for a PPP loan, you will need to include your documents showing the number of full-time equivalent employees on your payroll. Headcount is the total number of employees working in your company, including part-time and full-time workers. They are not measured in fractions or percentages — one employee is equal to one employee, no matter how many hours that employee has worked throughout the year. Calculating headcount is good for creating organizational strategies and setting goals, but it doesn’t give you specific insight as FTE does for data like departmental labor. Some are part-time workers, others only work during certain months of the year, others have flexible schedules, others work during one project, and so on.

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Use online estimator tools to examine what penalties or payments you might be held accountable for. Find the total hours for both your full-time list and part-time list. For large employers, calculating FTEs is necessary in order to determine if they are subject to the employer shared responsibility provisions of the Affordable Care Act .

• If a working week is 40 hours over 5 days, a 0.75 FTE employee will work just 30 hours in that same period.
• Essentially, it relates to the actual hours both full-time and part-time employees work during a regular workweek.
• The results will reflect the actual full-time payroll of the company.
• In other words, do you know what the full time equivalent is and how it can help you better understand the needs of your organization?
• Double-check your information before pressing “calculate” to make sure that it is correct.
• When you calculate FTE, you can find the costs of time, personnel, and money to determine staffing decisions.

In this section, we will explore how to calculate FTE for different laws or programs. Jennifer Hartman has more than 20 years of writing and content experience, working with small businesses and Fortune 100 companies. For over a decade, Jennifer worked as an HR generalist, providing expertise in accounting, payroll, and HR by implementing payroll and benefits best practices and creating onboarding and employee-relations documentation. FTE is a very specific term used to calculate whether a company is required to provide benefits under the Affordable Care Act and the Family Medical Leave Act , for example.

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A typical full-time schedule is 40 hours per week, 52 weeks per year, which totals 2,080 hours. So, in this case, you would add up all employee hours for the year and divide by 2,080.

Divide the total part-time employees’ hours by the total hours an employee must work to be full time . Add together your full-time and FTE part-time employees to get your total full-time equivalent employees. A full-time equivalent employee is a combination of your part-time employees.

Method 3 of 3:Obtaining and Using Professional FTE Calculations

For example, if an organization considers 40 hours per week as full-time and there are four employees who work 10 hours each per week, the hours for those four employees add up together to make 1.0 FTE. For a business, specifically those with a large number of part-time workers, converting worked hours into FTEs is important in helping the company know how many full-time employees the part-time workers are equal to.

It is a term representing a unit that explains the degree of involvement or work undertaken by an employee. It is equal to the Full Time Equivalent total work executed by one full-time worker. An FTE is a measure of how many employees are equivalent to a full-time worker.

Thus, the number of full-time employees working full eight hours is 62.5. It is used to determine the requirement of human labor for a project or a task. It measures the labor capacity a project, activity, or task needs. The main purpose of using FTE is to calculate the cost — in time, money, and personnel — of the project. The business uses this concept in project management and resource management for staffing decisions. Andjaro provides a real-time view of all available pools of employees, both internal and external.

Add up all part-time hours

Generally speaking, you can arrive at your own FTE by following the steps below. How to cope with working long hours 15 survival tips on how to cope with working long hours ⁠— from how to stay healthy and avoid burnout to how to deliver quality work….

• Several part-time employees may be equivalent to a full-time employee, depending on the number of hours they work during the listed periods.
• This ensures that you’re not getting a skewed result based on a higher or lower number of hours worked in a week than typical.
• To find your average number of FTEs for the year, add together your total FTEs per month and divide your total by 12.
• For example, if a company considers 40 hours full time, and there are two employees working 20 hours per week, those two employees would be 1.0 FTE.
• As would four part-time employees who each work 10-hours per week, totaling 40 hours.
• When 8 working hours are divided into 136 hours, the result is 17 FTEs.

ALEs are subject to penalties and fines if they fail to do so. Hours worked are just like they sound — how many hours an employee has worked. You need to understand hours worked for financial processes, like billing and budgeting.

What is an FTE employee?

Rather than work hours, class hours are used, with full-time students being those with a full credit load and part-time students being those taking fewer than 12. However, other schools may use different credit hour calculations for FTE. This rate is known as the affordability threshold and is typically adjusted every year to account for changes in market conditions, healthcare premium growth, and the American economy. Another key provision in the ACA states that all ALEs must offer a health insurance plan that qualifies as minimum essential coverage , otherwise known as the employer mandate. Full Time Equivalentor “FTE” means a position requiring an annual minimum of 1840 productive work hours performing Work. The 1840 work hours do not include any paid or non-paid time off, or any time spent performing business not related to this Agreement. Independent contractors or 1099 workers do not count toward ALE.

Under the ACA, some large employers might be responsible for providing minimum essential coverage or making shared responsibility payments to the IRS. For example, at The University of Utah, eligible employees who work the equivalence of 0.50 to 0.74 FTE of a full-time https://www.bookstime.com/ schedule will accrue at 50% of the full-time benefited rate . To convert the number of hours your employee is expected to work based on his or her FTE, you’ll need to reverse the previously mentioned process of calculating FTE based on the number of hours worked.

What is 100 percent FTE?

This change will reduce administrative staffing by a .5 Full-Time Equivalent position – Assistant Program Coordinator . You can repeat this formula weekly, monthly, quarterly, or annually for more specific insights. Performance or productivity defines the profit structure of an organization and employee strength is its pillar.

• This provision also requires employers to give employees 1095-Cs for tax purposes and to determine whether the ALE owes further payments or penalties.
• Full-time equivalent employees equal the number of employees on full-time schedules plus the number of employees on part-time schedules converted to a full-time basis.
• Part-time employees are included as a fraction of one FTE based on how much they work.
• For small employers, calculating FTEs can help them determine if they are eligible for a tax credit worth 50% of their paid health care premiums.
• That would mean that a full-time employee would work an approximate of 40 hours a week and 160 hours a month.
• To find your full-time equivalents for the calendar year, add together your total FTEs per week and divide your total by 52 .

You can also use FTE to compare headcount to revenues or square footage, which may be useful for making decisions about budgeting and hiring/laying off. They will need access to your employee files, previous tax documents, and other similar types of documents. Employee mental health has become a significant problem for organizations over the past… Some employees (U.S. citizens or noncitizens) working outside the U.S.

Divide the total hours worked by the number of full-time hours. This will determine the FTE of the company for a particular period. To determine your eligibility for the small-business tax credit, you’ll need to use a different system for counting FTEs. First, count the total number of employees who worked at your company at any time during the year, both full-time and part-time. In conclusion, having accurate FTEs for all your employees will also help employers determine responsibilities towards them, their PTO rates, and whether the business is eligible for certain federal programs. The comprehensive health care reform law was enacted in March 2010. Additionally, FTE calculations give you a better sense of your current staffing levels so that you can plan and budget accordingly.

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A single full-time employee is the baseline of the measurement and has an FTE of 1.0, while a part-time employee working half as many hours has an FTE of 0.5. These values are combined with simple addition, so that three part-time employees working half as many hours as a full-time employee would have a total FTE of 1.5. This is where the concept of the full-time equivalent employee comes in. Put simply, FTE is a way of tallying a company’s total staff. This is done by counting somebody who works half as much as a full-time employee as half an employee, and so on.

• When it comes to running a successful business, you always want to be as efficient as possible and cut costs wherever you can.
• At 50 FTEs, you’re required by the ACA to provide health insurance to your employees and by the FMLA to allow employees to take up to 12 weeks of leave for qualifying conditions.
• Full-Time Employees generally work more than 4 days or 30 hours a week and are permanently employed, as opposed to being temporary or seasonal.
• The “pay or play” penalty for nonprofit and for-profit organizations, which the IRS determines based on the employer’s 1095-C and 1094-C forms and the employees’ individual tax returns.

If you fail to meet the mandate for one full year but have met other requirements, you will owe an amount equal to the number of full-time employees you employed during that year, minus up to 30 employees. As of 2021, you would then multiply this amount by USD 2,700.

How to Calculate FTE for Individual Projects

If your business averaged more than 100 FTEs, your tax credit is based on wages paid to employees who did not work during the period. The Employee Retention Credit is another CARES Act relief measure for businesses. The ERC is a fully refundable tax credit that eligible employers who keep employees on payroll can claim.