Bookkeeping

How to Calculate Full-Time Equivalent FTE

what is an fte employee

A part-time employee that works 20 hours a week counts as 0.5 FTE. If you add all of the weekly hours of your employees and divide it by the hours in the workweek, you’ll determine how many full-time equivalent employees your business has. To determine your total FTE, add the total part-time hours worked, plus the total full-time hours worked. From there, if your full-time hours are 40 per week, divide the number by 2,080. If your total full-time hours are 30 per week, divide the number by 1,560. This will give you your total FTE for all full- and part-time employees for the year.

what is an fte employee

You can use FTE to analyze your operations and compare your business to industry standards. It is also useful to compare revenues to facility and staff sizes. Learn how companies like yours use ClickTime every day to improve their workforce’s efficiency. This is where you’ll find the latest news and resources from BambooHR. Keep track of every penny, hour, and PTO request without breaking a sweat. Save time, save trees, and track every signature down to the minute.

Step 4: Separate the part-time hours

The program provides forgivable loans to small businesses to help cover up to 24 weeks of payroll costs, interest on mortgages, rent, and utilities. Besides ALEs needing to know their FTE status to comply with the employer mandate or not, understanding how many FTEs you have at your organization is good for your company’s metrics. Being able to track your employees’ workloads and output between your full-time employees and FTEs gives you more insight into how efficiently https://quickbooks-payroll.org/ your employees are working. Use FTEs to check eligibility for tax and health insurance policies. Some health insurance policies through the Affordable Care Act are only available to businesses that have certain FTEs. For example, the Small Business Health Options Program requires you to have fewer than 50 FTEs to qualify. If you have more than 50 FTEs, then your business must offer 12 weeks of family and medical leave as well as more comprehensive health insurance plans.

You’ll also need to complete IRS forms 1094-C and 1095-C describing the type of healthcare you provided according to the employer shared responsibility provisions . FTE or Full-Time Equivalent is an HR metric that quantifies an employer’s number of full-time employees regardless of how many hours each employee works. It was created to measure part-time employment in terms of full-time hours.

What constitutes a full-time employee under the Affordable Care Act (ACA)?

And some state and federal employment laws only apply to companies who meet a certain threshold of FTE employees. In a 0.75 FTE position, an employee will typically work 75 percent of the hours of a full-time employee. If a working week is 40 hours over 5 days, a 0.75 FTE employee will work just 30 hours in that same period.

what is an fte employee

Some labor laws and employee benefit programs are linked to how many employees a company has on its payroll. To ensure that a company with 100 part-time employees is treated as fairly as one with 50 full-time employees, an FTE is calculated to compare both workforces. FTE stands for full-time equivalent, and it’s a unit of measurement equal to the number of hours typically worked by a single full-time employee at a given company. FTE is a way for employers to add up and compare a mix of part-time and full-time workers, by combining their relative working hours into one simple and easy to understand value. Some are part-time workers, others only work during certain months of the year, others have flexible schedules, others work during one project, and so on.

What is 100 percent FTE?

Your 55 part-time and full-time employees are equal to 48.68 FTE. Your 36 part-time and full-time employees are equal to 33.5 FTE. The first step in calculating FTE is to make a complete list of all employees. Also, do not include yourself as the business owner, unless you are paid a salary and receive a W-2.

  • Furthermore, this value is used only as a basis for calculating the annual FTE and reflects the hours of an employee who works 5 days a week, 8 hours a day.
  • The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees.
  • But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.
  • This, therefore allows them to make better decisions regarding personnel management.
  • Divide the total hours worked by the number of full-time hours for the given time period to find the FTE.
  • Try our payroll software in a free, no-obligation 30-day trial.

Create a thorough allocation report by determining productivity figures for each employee (depending on their role/department). Meet with your management team, trusted employees, and other stakeholders and compare your figures to their on-the-ground experiences. Take into account seasonal and annual growth trends, making use of your most current market analysis figures. For example, say you run an ice cream van five hours per day, four days a week .

What is a full-time equivalent employee?

When you analyze staffing in terms of hours worked rather than number of employees, it gives a more accurate picture of business performance. When a business employs a significant number of part-time staff, it can be useful to convert their hours worked into full time equivalents, to see how many full-time staff they equate to. The FTE concept is used in a number of measurements that compare headcount to revenues, profits, or square footage. The fte meaning concept is also useful for comparing headcount levels among the firms within an industry, as part of an industry analysis. 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. 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”.

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