What Is Full-Time Equivalent FTE? G-P

Instead of debating whether headcount, hours worked, or FTE is more or less effective, consider them three integral components of a successful company. You’ll use all the information from each category to create and orchestrate strategic plans with clearer insight into your daily operations. Subtract all approved leave hours from the total number of each employee’s hours worked. This article was co-authored by Jill Newman, CPA and by wikiHow staff writer, Hunter Rising. Jill Newman is a Certified Public Accountant in Ohio with over 20 years of accounting experience. She received her CPA from the Accountancy Board of Ohio in 1994 and has a BS in Business Administration/Accounting.

It’s used by businesses to figure out how many full-time or part-time employees are in a company and for organizing projects. It’s an important element to accounting to determine employee wages, hours of service, and your company’s expenses. The ACA’s employer mandate applies to any employer who has at least 50 full-time equivalent employees. This can be a combination of full-time and full-time equivalent employees, with each full-time employee counting as one, and full-time equivalent employees added as described above. Standard FTE assumes that typical employees work 40-hour workweeks, five days a week, and eight hours a day. Since there are 52 weeks per year, this equates to an average full-time employee having the opportunity to work a total of 2,080 hours. This number doesn’t reflect sick leave, paid time off, seasonal assistance, or paid overtime.

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ALEs must offer insurance to each full-time employee who works at least 130 hours per calendar month. To calculate FTE, identify the total number of hours worked by part-time employees during a particular time period. Then, calculate the total number of hours worked by full-time employees for that same time period. Add the hours worked by full-time and part-time employees together, then divide that number by the total hours worked by full-time employees to determine the FTE for that particular period. 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.

For example, if a company requires employees to work at least 35 hours per week, they would be considered full-time. However, if this individual has been working on research and development for 40 hours per week for two weeks, their FTE would be 1.15 (40÷35). For example, if an organization’s FTE is 40 hours per week, it would require two part-time workers to fulfill the same hour requirements as one worker working 40 hours over five days. The FTE is a unit of measure for an employee or a student’s workload. The hours worked per day, week, or month are compared to what these same units are for full-time employment, and the subsequent calculations reflect them.

How Does FTE Compare Against Other Employment Metrics?

Imagine you run a fidget spinner company with 15 salaried employees and 10 part-time employees. Your salaried staff members work 40×15, a total of 600 hours a week. Your 10 part-time employees work 20×10, a total of 200 hours a week. The number of hours worked in a particular week determines whether an employee is entitled to overtime pay, not whether they are considered full-time or part-time. Under federal law, overtime is due whenever a non-exempt employee works more than 40 hours in a workweek. A few states also require overtime when employees work more than a certain number of hours in a workday, among other situations. Next, you need to divide the total hours worked by all employees by the number of hours in a full-time work week .

This gives you a figure of 29, which means that your business has a total of 29 FTEs. One FTE does not necessarily equal one employee; one employee working 40 hours per week is equivalent to one FTE, but two employees working 20 hours per week each are also equivalent to one FTE. The expected length of a full-time schedule has changed a lot through history — full-time employees now work about 20 or 30 hours per week less than they did in the 19th century. The U.S. Office of Management and Budget, or OMB, the President’s budget office, will often place upper limits on the total number of FTE that a given agency may utilize each year. In the past, if agencies were given a ceiling on the actual number of employed workers, which was reported on a given day of the year, the agency could employ more than this number for much of the year. Then, as the reporting deadline approached, employees could be let go to reduce the total number to the authorized ceiling on the reporting date.

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Holly is the new Human Resources Director for the Hearts of Care Medical Center. She needs to come up with staffing levels for the next budget, and is going to use full time equivalents as a basis. Full time equivalents measure how many employees are needed assuming that all employees work a full time schedule. Businesses with 50 or more full-time equivalent employees are required to offer comprehensive, affordable health insurance coverage or they risk a penalty. 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. 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.

• The US falls somewhere in the middle when compared to other countries, with 38 hours and 35 minutes of work time per week, on average.
• In order to get a more accurate and nuanced understanding of your team’s human capital, however, you should use Full-Time Equivalents .
• If you are such an employer, then you are eligible to apply for a tax credit in the amount of 50% of employer-paid health care premiums.
• FTEs are widely used in headcount calculations that measure the number of employees.

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. Calculating FTE for individual employees may help you decide whether your employees are eligible for certain programs, such as the Public Service Loan Forgiveness program. An FTE calculation for all employees in a company needs to be rounded down to the nearest whole number (usually, 1.0 FTE or greater). FTE is also used to calculate the number of accrual hours for PTO, per employee. Full-time equivalent students is one of the key metrics for measuring enrollment in colleges and universities.

When you are determining FTE, it’s important to know what a full-time workweek means to your company. Depending on the country, teachers could work different hours, fte meaning but usually, they will be between 30 and 40 hours, with overtime if required. The FTE in teaching also takes into consideration public and school holidays.

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. 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. FTE refers to calculating the number of hours instead of the number of employees to forecast costs based on a full-time workweek.

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. 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. Employees who worked less than 40 hours per week on average during a specific calculation period will have their average hours worked on a weekly basis added together.