Then, the total hours that both full and part-time employees worked is divided by the full-time equivalent hours per employee. Therefore, eligible employees may obtain affordable and minimum health insurance coverage thanks to FTE calculations under the Affordable Care Act. Any employee having at least 30 working hours per week (or 130 a month) is considered a full-time employee under this act. There are some exceptions when calculating FTE for the purposes of the small business tax credit. One FTE equals 2,080 hours per year and the total number of employees is taken into account rather than the number of hours they have worked.

For example, if a part-time employee works for 26 hours one week, their FTE value would be 0.65 (26 hours worked / 40 hours). And if an employee works a full 40-hour week, their FTE value would be 1.0 (40 hours worked / 40 hours). Employers can use an average number of FTE employees for each pay period falling within a month.

FTE Calculation Examples

To help you determine if you are eligible for a small-employer healthcare tax credit, you need to count the number of employees employed in your company throughout the year. The calculation is straightforward — enter the number of full-time employees together with the total number of hours worked by part-time employees per week. The calculator will tell how many full-time employees that represents and whether or not you are an Applicable Large Employer. The calculation is straightforward — divide the employee’s scheduled hours by the number of hours that represent an official weekly full-time schedule in a company (e.g., 40 hours per week).

If the trucks open at the same time, then you require two different people to run them. Employers can use FTE to guide their hiring strategy and plan for a project, while governments often use the metric to determine program eligibility. Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll. You should also leave out any employees who work outside the U.S., leased employees, and workers who hold positions like direct selling or commission-based agenting.

What does FTE stand for?

In this case, two part-time workers would count as 1.0 FTE, and four part-time workers would count as 2 FTE. Various combinations can be created depending on the needs of the business. To calculate the total FTE, add the number of FTEs worked by full-time employees (1 FTE for each full-time worker) to the part-time FTE you calculated in step five. To identify the FTE of part-time employees, divide the total hours worked by part-time employees by the annual hours worked by one full-time employee (i.e., 2,080 hours). Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees. Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes.

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. When a business employs a significant number of part-time staff, it can be useful to convert their hours worked into full time https://www.bookstime.com/articles/full-time-equivalent equivalents, to see how many full-time staff they equate to. The FTE concept is used in a number of measurements that compare headcount to revenues, profits, or square footage. The concept is also useful for comparing headcount levels among the firms within an industry, as part of an industry analysis.

How to calculate FTEs

You can apply different methods for different classifications of employees, as long as you apply the method consistently within each classification. Once you have a total number of hours, divide by 2,080 and round down for your FTE. You typically would not include hours that owners or partners work within this calculation, but you can do so for your own accounting purposes if you want to include labor from ownership as part of your evaluation. This provision also requires employers to give employees 1095-Cs for tax purposes and to determine whether the ALE owes further payments or penalties.

Some businesses list this information in their employee handbooks or offer letters. For example, a business might state, “Our standard work hours are Monday to Friday from 8 a.m. – 5 p.m.” If employees take a one-hour lunch, then the available hours per workweek is 40 hours (eight hours a day x five days a week).

Eligibility for the PPP (Paycheck Protection Program)

Considering that the FTE unit of measure is based on the total number of hours worked — it may not indicate the actual number of people working in a company. With the required inputs in place, we can arrive at approximately 52.40 FTEs by dividing the total hours worked by all employees by the total number of available work hours in a year. In general, full-time means an employee who works 40 hours per week, although this can vary depending on the organization. A business is required to follow employment laws that depend on the number of employees and respectively FTE.

Although the DOL doesn’t define what a full-time employee is (it leaves that definition up to the employer), the IRS does, so make sure that as work roles change, you keep up-to-date records of your FTE employees. A full-time equivalent in government employment, as defined by section 85 established by the U.S. President’s Office of Management and Budget (OMB), is calculated as the total number of straight-time hours, excluding overtime and holiday, divided by total compensable hours for the year. Moreover, having accurate FTEs for all employees will also help employers determine responsibilities towards them, their PTO rates, and whether the business is eligible for certain federal programs.

Step 3: Determine Part-Time and Full-Time Numbers

For that reason, companies may need to calculate the full-time equivalent. It allows companies to determine the number of full-time employees they employ. These metric is particularly important when companies are comparing themselves with industry averages or with close competitors.

FTE stands for full-time equivalent and measures how many full-time employees an organization has. This is particularly true for large organizations that employ a variety of full-time, part-time, and flexible staff. Full-time Employees are workers who typically work for hours a week https://www.bookstime.com/ and are employed on a permanent basis. Along with regular wage, they get benefits such as health care, vacation pay, pension, and other requirements as per the prevailing law. Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year.

Within this method, the employee is credited with 40 hours for each week when payment was due (including PTO). An FTE salary is an employee salary converted into a full-time equivalent salary within a full year, regardless of whether the said employee holds a full-time or part-time position. The actual workload is not taken into consideration for this calculation.

• In most cases, full time equivalents measure an employee or student and/or their workload.
• On the other hand, FTE is used for complex and intensive projects that may require different or reinvented frameworks, methodology,, and processes.
• A company’s accounting department is usually responsible for processing large numbers of transactions.
• Many times, FTE is confused with “full-time employee”, so before we move on to the details and procedure to calculate metrics lets look at what is the difference between the two concepts.

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