Full Time Equivalent FTE Formula + Calculator

Several federal programs in the United States—such as the Paycheck Protection Program —use FTE to determine employer eligibility. FTE is also used in the United States to determine whether an employer is an ALE for the fiscal year. Finally, small business owners in the United States need this metric to see if they can apply for a tax credit in the amount of 50% of the employer-paid health care premiums. Whether an employer is an ALE under the shared responsibility provisions will depend on the size of the organization. Those employing an average of at least 50 full-time employees including full-time equivalent employees are considered to be an ALE. A full-time equivalent employee refers to a combination of part-time employees that add up to one or more full-time employees.

FTE or Full-Time Equivalent is a measurement used to convert hours worked by several part-time employees into hours worked by full-time employees. The Full-Time Equivalent is the number of computed full-time positions. It is used to count employees depending on their degree of employment.

The Importance of Determining FTEs

To get a good estimate, it’s best to average hours over a 90- or 120-day timeframe. In addition, if you’re calculating FTE for ACA purposes, you’d only include the part-time person in your calculations if they worked 120 days or more per year. In our example, Jimmy and Marta would be considered part-time employees. To calculate FTE for COBRA, multiply the number of part-time workers you have by the average number of hours they each work per week, and divide the result by 40 (the working hours in a week for a full-time employee). 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.

• She has experience working as an accountant in public accounting firms, nonprofits, and educational institutions, and has also honed her communication skills via an MA in English, writing jobs, and as a teacher.
• This uniformity is quite helpful in job categories and other areas.
• Simply divide the number of hours worked by the number of hours deemed full-time to obtain the FTE value for certain employees.
• 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.

Actual hours worked per week is the exact number of hours an employee worked. However, you’d want to average those hours over a time period such as four months. This ensures that you’re not getting a skewed result based on a higher or lower number of hours worked in a week than typical.

Calculating FTE for the Small Business Tax Credit

In contrast, a part-time employee working only 20 hours per week would have an FTE of 0.5—which shows that their hours worked are equivalent to half of a full-time employee. To calculate your FTE when applying for a PPP loan, take the average number of hours worked by employees each week for the covered period, divide by 40, and round to the nearest tenth. For a PPP loan, a full-time employee is considered to work at least 40 hours per week, and no single employee can have an FTE exceeding 1.0.

It could also be a temporary staff member who works an irregular schedule. 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 this example, your company has the equivalent of 5.24 full-time employees, or a 5.24 FTE. By this measurement, your four part-time workers amount to just less than one and one-quarter of a full-time equivalent employee.

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The full time equivalent’s mission is to reduce the cost of health insurance coverage for eligible individuals. The act includes cost-sharing reductions and tax credits to help lower costs for lower-income families and individuals. It requires small group health plans to meet certain requirements, such as covering essential health benefits (e.g., preventative services). The ACA makes health coverage a shared responsibility of individuals, employers, and the government to ensure that as many people as possible have affordable health insurance. While the law doesn’t require all business organizations to offer health insurance to their workers, employers who have 50 or more FTEs and are therefore considered ALEs must comply with the employer mandate.

• 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.
• Altogether, those 18 employees only account for the hours of four and half full-time employees.
• With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year.
• As an employer, at some point or another, you may have stumbled across the term “full-time equivalent employee.” Maybe you noticed it while researching information about the Paycheck Protection Program loan.
• As a reminder, for employers who averaged fewer than 100 FTEs in 2019, the ERC is based on wages paid to all employees.

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. If you want to run a business, or you already have one, two important things and skills you need to master are acronyms and math. Because, if you don’t know about this stuff, how else are you going to know how to calculate 0.5 FTE? I bet you feel pretty stressed right now, your head must be hurting… But don’t worry, luckily we are here for you and in this article you will find the answers to all of your questions.