This blog does not provide legal, financial, accounting, or tax advice. This blog provides practical information on the subject matter. ADP does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. There is no option to pay a part-time exempt employee below the minimum salary requirement. Generally, if you pay the employee a salary less than the minimum, the employee must be classified as non-exempt. Divide the total number of hours by 2080, and that ultimately determines the number of FTEs.
— Travis Call (@tcallglomo) August 18, 2014
At 50 FTEs, you’re required by the ACA to provide health insurance to your employees and by the FMLA to allow employees to take up to 12 weeks of leave for qualifying conditions. Full-Time Employees generally work more than 4 days or 30 hours a week and are permanently employed, as opposed to being temporary or seasonal. In many countries, a Full-Time Employee is also entitled to health-care benefits and vacation pay among other legal employment standards. We’ll assume that where you are, full-time employment means working 8 hours a day, 5 days a week, for 52 weeks a year. 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 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.
FTE Calculation Examples
Also, do not include yourself as the business owner, unless you are paid a salary and receive a W-2. If you’re concerned about staying compliant, consider software such as Homebase that will track your employee hours, provide reporting, and can also prepare your time sheets for payroll. Jennifer Hartman is an HR Specialist and staff writer for Fit Small Business, with over 15 years of experience in accounting, payroll, and human resources. Whereas, employees that works 20 hours per week are considered 0.5 FTEs.
What is FTE?
FTE stands for Full-Time Equivalent. It is a unit of measurement that represents an employee’s work hours on a weekly full-time basis.
Simply multiply the number of weeks in a year by the number of work hours in a week. For example, if you have a 32-hour workweek, multiply it by 52 weeks. That equates to 1,768 hours a year for each full-time employee. Therefore, the FLSA generally applies equally to full-time and part-time employees. Some state employment laws take workforce size and full-time vs part-time employment into account.
Why is it important to understand workforce size in terms of FTEs?
This, therefore allows them to make better decisions regarding personnel management. For example, comparing the two groups over time allows an organization to find opportunities to improve efficiency when hiring seasonally or when making part-time and full-time staffing decisions.
- The ACA’s mission is to reduce the cost of health insurance coverage for eligible individuals.
- 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.
- Keep in my mind that some laws, including the ACA and the Paycheck Protection Program , require employers to use specific calculations to determine the number of FTEEs.
- Moreover, having accurate FTEs for all your employees will also help employers determine responsibilities towards them, their PTO rates, and whether the business is eligible for certain federal programs.
- However, if you pay your interns, you will need to include them in your calculations.
Once you have a total number of hours, divide by 2,080 and round down for your FTE. Keep in my mind that some laws, including the ACA and the Paycheck Protection Program , require employers to use specific calculations to determine fte meaning the number of FTEEs. If there is no time constraint, you can hire 5 people to complete the same project. Four employees hired part-time for a quarter of the work schedule are also equal to a single full-time employee.
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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. (For a year, that is 2,080 hours with 40-hour workweeks and 1,560 hours with 30-hour workweeks, which is considered full-time for ACA reporting).
- – 5 p.m.” If employees take a one-hour lunch, then the available hours per workweek is 40 hours .
- A full-time equivalent employee is a combination of your part-time employees.
- Since each full-time employee counts as 1 FTE, they should each get a similar amount of work done during the day.
- Full-time equivalent students is one of the key metrics for measuring enrollment in colleges and universities.
- Full-Time Employees generally work more than 4 days or 30 hours a week and are permanently employed, as opposed to being temporary or seasonal.
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. Hiring 7 employees full-time and 1 part-time gives you an FTE rate of 7.5, and you can complete the project in 20 days. Two employees hired part-time who work half of your company’s daily work schedule are equal to a single full-time employee. An employee who works in a full-time work schedule as per your organization’s standards is a full-time employee. One of the most common yet often perplexing compliance concerns HR teams encounter is calculating FTE, or full-time equivalency.