What is Full-time Equivalent FTE & How to Calculate It

This tells you how many FTE employees your part-time workers add up to. Add this to the number of actual full-time employees you have to find your total FTE. Under the ACA, employers must add their FTEE count to their full-time employee count to determine the total size of their workforce. This is a critical calculation because employers with 50 or more full-time and FTEEs must generally offer health coverage to their full-time employees and their dependents. These employers are also subject to specific reporting requirements. According to the IRS, a US employee has to work 30 hours every week or 130 hours a month to qualify as a full-time employee. In many organizations, the most typical work schedule is 40 full-time hours per week.

These laws typically require the employee to work in the jurisdiction for a minimum number of hours to be eligible for sick leave. In most cases, the threshold is set low enough that many part-time employees satisfy this requirement. Full-time equivalent allows employers to measure the number of full-time employees they need.

Example: PPP

Business use FTEs to measure performance, plan labor, and for certain regulations under the ACA. Plan for projects based on the number of FTEs required to complete them. Get actionable tips for success at every stage of your time tracking journey.

• Benefits like paid time off and maternity/paternity leave are all included within the number of hours worked, so don’t worry about accounting for these hours.
• A simpler way of calculating FTE for PPP is to assign an FTE of 1.0 to employees working 40 or more hours per week, and an FTE of 0.5 to those who work less.
• By this measurement, your four part-time workers amount to just less than one and one-quarter of a full-time equivalent employee.
• In most cases, full time equivalents measure an employee or student and/or their workload.
• Available hours per week is the number of hours your business considers standard work time multiplied by the number of employees you require to accomplish those related needs.
• Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

Make sure you understand how federal, state, and local laws apply to your part-time, full-time, and full-time equivalent employees and create policies and practices that comply. 60% of funds spent on monthly pays, hourly earnings, commissions, additions, and other incentives. With non-payroll costs consisting of 40% of the funds spent on rent, interest on loans, or conveniences of the employees. You are attempting to determine the HR requirements for a project that will take 1200 hours and require your team to work 8-hour shifts per day. By dividing 600 by 8, you can determine the number of days your team has to work to complete their tasks. It will also help you identify the required number of employees to complete the task in the specified days.

Several part-time employees can add up to one full-time employee. Confused? Here’s how FTE works

It is critical for accounting purposesand determining wages, and for calculating the company’s expenses when paying its workers. Under the FFCRA, covered employers must provide both full- and part-time employees with emergency paid sick leave if they’re unable to work or telework for a covered reason. Full-time employees are entitled to up to 80 hours of EPSL, and part-time employees are entitled to EPSL in the amount of the average number of hours they work over a two-week period. Apart from the FFCRA, certain states and local jurisdictions also require employers to provide paid sick leave to employees.

• Next, divide the total hours worked by part-time employees by 120 hours to find how many full-time employees your part-time workers make up.
• Each FTE is equivalent to the number of hours your full-time employees work.
• Lastly, add the number of full-time employees you have to the full-time equivalent of your part-time employees to get your total FTEs for your organization.
• This tells you how many FTE employees your part-time workers add up to.
• Full-time employees are entitled to up to 80 hours of EPSL, and part-time employees are entitled to EPSL in the amount of the average number of hours they work over a two-week period.

While 30 hours per week is the minimum number of hours needed to be classified as full-time by the IRS, in many companies, a 40-hour workweek is considered full-time hours. When you calculate full-time equivalent employees, you generally find the average hours worked by your part-time employees during a certain period of time. Then, you divide that number to determine how many FTE employees your part-time employees make up fte meaning and add them to your full-time employee total. But as mentioned, the full-time equivalent employee calculation can vary depending on what you are calculating the FTEs for. In most cases, employers fall below the threshold required to be an ALE and are, therefore, not subject to the employer shared responsibility provisions. An understanding of FTE also helps employers decide when to hire staff for short-term projects.

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Divide your total hours by 40 hours to get the number of full-time equivalent employees for the week. 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. The credit is equal to 50% of qualified wages eligible employers pay employees between March 13, 2020 and December 31, 2020. COBRA allows employees, covered spouses, and dependents to temporarily continue their group health insurance coverage if they become ineligible for the plan provided by your business. The act specifies when someone qualifies for COBRA coverage, how long coverage lasts, and when and how employers must provide coverage. A full-time equivalent employee is a combination of your part-time employees.

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In this article, we will explore the meaning of FTE from a U.S. perspective, how it is calculated and the purposes of doing so as an employer. An explanation of how FTE is calculated and the various ways in which a business can use this metric when forecasting and budgeting. For the most accurate FTE calculation, hire a tax lawyer or accountant to calculate them for you. Outside of the business environment, FTE is also used to measure a student’s class load or involvement in a school project… It seems like we never leave school behind. Business owners who want to understand whether their business is eligible to apply for a Paycheck Protection Program.

• When working on the budget and personnel resources for a project, you’ll likely come across the term FTE.
• In this schedule, each full-time employee works 2,080 hours each year.
• Calculating full-time equivalent employees depends on what you are computing the FTEs for.
• If you’re offering health coverage to remote workers, there may be some additional considerations.