What is full-time equivalent and how to calculate it + free FTE calculators

Generally speaking, you can arrive at your own FTE by following the steps below. I accept the treatment of my data to receive related communication about the service. The full-time equivalent is an indicator that answers many of the questions Human Resources departments need answers to. This, therefore allows them to make better decisions full time equivalent regarding personnel management. 💡You can use Clockify to create project estimates, have your team track the time they spend working on the said project, and then make comparisons and track progress. To read more about how to improve your skills in making project estimates, check out our blog post about How to make precise work estimates.

Make sure to submit these documents alongside your application. One whole FTE unit is 1.0, which can be made up of a single person or multiple employees. Let’s say a full-time measurement for your company is 40 hours per workweek. A single full-time employee could fulfill all 100 percent of this unit, or eight employees working five hours per week could.

Do Unpaid Interns Count Toward FTE Status?

The affordability threshold for employer-sponsored health plans in 2021 is 9.83%, which is a small increase from the rate of 9.78% in 2020. In our example, we calculated Janet at 1.25, Tom at 1.0, Ryan at 0.5 and Gina at .25. Sign up to receive more well-researched small business articles and topics in your inbox, personalized for you. Sign up to receive more well-researched human resources articles and topics in your inbox, personalized for you.

In many countries, a Full-Time Employee is also entitled to health-care benefits and vacation pay among other legal employment standards. Full-time equivalent, or FTE, is a metric company based in the U.S. use to count how many hours all workers — including full-time, part-time, flexible, temporary, and as-needed employees — have worked. You might also find FTE referred to as whole-time equivalent or work-year equivalent , depending on the context. By adding the full-time and part-time hours worked, we can calculate the total number of hours worked by all employees for the year as 109,000. The part-time employees, on the other hand, work 20 hours per week and 25 weeks out of the year. The FTE calculation counts part-time employees as a fraction of a full-time employee, most often on the basis of the number of hours worked.

What is an FTE employee?

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. In the chart below, because both Carole and Lynn are full-time employees, they would each be counted as one FTE. However, determining the FTE for Jimmy and Marta requires calculation. The small business owners maintained an FTE level in their organization from February 15, 2020, till December 31, 2020. The company must have maintained optimal equivalent employee levels by retaining current employees. They could also or rehire employees laid off or furlough them between February 15, 2020, and April 26, 2020.

Full-Time Equivalents is a calculated metric that adds all of the true full-time employees to the fractional values for all part-time employees, contractors, students and interns. Full-time equivalents is a metric used to show you what your total labor hours equates to in full-time employees. The ACA legally requires that employers, individuals, and the government each help offer insurance to as many people as possible. Companies with 50 or more FTE hours worked — regardless of the actual headcount — legally classify as an Applicable Large Employer . Create a list of each employee and how many hours they worked in the year. Make separate lists for full-time and non-full-time employees to simplify later calculations. FTE, an abbreviation for “full time equivalent”, represents a unit of measurement standardized to equal the number of hours worked by the typical full-time employee.

What Is Full-Time Equivalent (FTE) & How Is It Calculated?

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. Under the ACA, certain small businesses are eligible for a small-business tax creditto help with the costs of offering health benefits to employees.

Knowing your number of FTEs is important for assessing business performance, and it’s required under the Affordable Healthcare Act and for certain tax credits. The method for calculating FTE is slightly different for each of these uses. This provision also requires employers to give employees 1095-Cs for tax purposes and to determine whether the ALE owes further payments or penalties. Use online estimator tools to examine what penalties or payments you might be held accountable for. FTE uses 1.0 to mean one full day of work, while 0.5 would mean half of that amount or less than a full day of work. Not every full-time employee is an FTE employee, since FTE status only includes employees who work hours contributing toward a 1.0 or 0.5 FTE measurement. Once you’ve calculated your employee FTE, you can see how many part-time employees it takes to complete the same workload as a full-time employee.

What is the purpose of FTE?

FTE stands for full-time equivalent and is used by businesses to calculate the total number of full-time hours worked within their business among all employees. A full-time employee is equal to one FTE; a part-time employee is equal to 0.5 FTE. In the case of a 35-hour workweek, an employer would simply divide an employee’s scheduled hours by 35 to arrive at the equivalent rate. For example, when the full-time employees’ workweek is 35 hours, an employee assigned to work 21 hours a week will have an FTE rate of 0.6.

Plan for projects based on the number of FTEs required to complete them. If you have at least 50 FTEs employees, you are an ALE for the year, which means you are subject to specific reporting requirements and share responsibilities under the ACA. If you’re expanding your company or seeking out-of-country talent, there are certain requirements you must follow for a successful partnership.