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How to Calculate FTE: Full-Time Equivalent Formulas & More

full time equivalent definition

If you’re ever asked to calculate FTEs for your company, the person or organization asking you for the figure should be able to outline exactly how they expect you to arrive at your result. Generally speaking, you can arrive at your own FTE by following the steps below. Clockify is a time tracker and timesheet app that lets you track work hours across projects. You’ll need to count the number of employees employed in your company throughout the year. For example, at The University of Utah, eligible employees who work the equivalence of 0.50 to 0.74 FTE of a full-time 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.

It comes in the form of a tax credit worth half of employee wages over the course of a covered period. 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.

Calculating FTE for COBRA

Let’s say you have four full-time employees, three part-time employees working 20 hours a week for 30 weeks per year, and one part-time employee working 15 hours a week for 52 weeks per year. Divide the total hours worked by all of your employees by the number of available full-time hours in a year . Get this by multiplying the number of full-time employees by the number of hours in a working week . FTE counts part-time employees as some fraction of a full-time employee, usually based on the number of hours they work (though depending on the business, there are other ways of measuring a given employee’s contribution).

  • This is done by counting somebody who works half as much as a full-time employee as half an employee, and so on.
  • In our example, Jimmy and Marta would be considered part-time employees.
  • There are differences between FTE, headcount, and hours worked.
  • This provision also requires employers to give employees 1095-Cs for tax purposes and to determine whether the ALE owes further payments or penalties.

To qualify for PPP loan forgiveness an organization must have maintained the same level of FTE employees during certain specified time periods following the loan disbursement. If you’re offering health coverage to remote workers, there may be some additional considerations. FTE calculations are also important when determining eligibility for certain federal programs and benefits. Full-time equivalent students is one of the key metrics for measuring enrollment in colleges and universities. The measure is often annualized to cover the average annual full-time equivalent students and is designated by the acronym AAFTE. This is how a company, on average, calculates the average yearly number of hours that a full-time employee works.

Second FTE example

BerniePortal® is an all-in-one HRIS that allows small and mid-sized businesses to optimize HR, improve employee experiences and spend more time building the businesses they love. If a company bills clients, or pays out overtime, identifying teammates’ full-time equivalency helps identify and track organizational costs. One of the most common yet often perplexing compliance concerns HR teams https://quickbooks-payroll.org/ encounter is calculating FTE, or full-time equivalency. From what it is and why it’s used to how to calculate the number, find out everything you need to know about how to calculate FTEs. Using % Availability, will take the incoming number and convert it to hours using the Resource’s Calendar when entering data into a record tied directly to a specific resource in Assignments and Staffing.

You can use the FTE total each week, month, or year to determine company growth. You can also use the FTE total to remain compliant with federal, state, and local labor laws that may be based on employer size such as mandatory sick time laws. 30-Hour a Week Example – If full-time in your company is 30 hours, then every employee who works 30 hours a week or more is considered full time.

full-time equivalent

For example, a project that is estimated to take 600 hours of work can be accomplished in a variety of ways depending on your allocation of staff and time requirements. full time equivalent 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.

  • The method for calculating FTE is slightly different for each of these uses.
  • Globalization Partners’ global employment platform streamlines worker classification and ensures your company is compliant in key areas like employment contact generation and payroll.
  • Full-time employees usually work 40 hours each week for over 120 days a year, but it also includes anyone who works more than 30 hours weekly.
  • Each employee who worked more than 40 hours per week on average during a specific calculation period counts as 1.0 FTE and is viewed as a full-time employee.
  • The actual PTO an employee can accrue may depend on several factors, including years of employment that dictate an employee hourly PTO accrual rate.

The amount they are liable to pay the IRS for an employer shared responsibility payment. This is also known as “the employer mandate” or “the pay or play provisions”. Calculating FTEs will also determine an employer’s duties under the shared responsibility provisions of the Affordable Care Act. An explanation of how FTE is calculated and the various ways in which a business can use this metric when forecasting and budgeting.