What Is FTE? How To Calculate Full-Time Equivalent

For example, an employee who works a full-time, 40-hour week would equal 1.0 FTE. As would four part-time employees who each work 10-hours per week, totaling 40 hours. You can calculate FTE to determine how much a project will cost in terms of time and personnel needs. You are subject to employer shared responsibility if you have at least 50 FTEs on average during the previous calendar year. Affordable Care Act rules state full-time employees are employees who work at least 30 hours per week or 130 hours per calendar month. FTE concept helps determine the workload and accordingly determines the number of part-time employees and the number of hours they will work. This is crucial for accounting purposes and wages determination, and total expenses incurred for paying the workers.

• The FTE employee doesn’t have to actually exist, and can be a combination of part-time employees.
• For example, if you have a 32-hour workweek, multiply it by 52 weeks.
• Let’s say you have an upcoming project and you need to determine all your costs.
• You could then apply a 1.8 multiplier to this number to account for equipment, facility rent, equipment, etc.

When 168 hours are divided into 7,056 hours, the result is 42 FTEs. Inpatients are medical, surgical, maternity, specialty, and intensive-care unit patients whose length of stay exceeds 23 hours. Peak inpatients are the highest number of inpatients at a given point in a typical 24-hour period. Sometimes one person can be your FTE 100%, or FTE 1.0, which is another way to call it. 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). ALE status is determined by calculating the total average FTEs during the prior year. Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects.

The Comprehensive Guide to Full-Time Equivalent for Businesses

Each employee who worked 40 or more hours per week on average, during a specific calculation period counts as 1.0 FTE. No employee can be greater than 1.0 FTE, as overtime is not counted for this calculation. If you fall under the criteria for an applicable large employer, you’re required to offer health insurance to your employees. Plus, knowing your company’s FTE count will help reduce overall full time equivalent costs by forecasting employee hours and salaries. FTE refers to calculating the number of hours instead of the number of employees to forecast costs based on a full-time workweek. A full-time employee can be defined by a 40-hour workweek, 8-hours per day, 5 days per week. If an employee were to take no vacation time, and he or she works 40 hours a week, it would add up to 2080 hours.

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. 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. Divide this total number with 40, and then round the total to the nearest tenth to get the total FTE. Next, divide the total hours worked by part-time employees by 120 hours to find how many full-time employees your part-time workers make up. Let’s check out an example of calculating FTEs for the Affordable Care Act. As a reminder, you are subject to the employer shared responsibility of the ACA if you have at least 50 FTEs on average during the previous calendar year.

Need help with accounting? Easy peasy.

In general terms, full-time equivalent is a unit of measure that plays a role in calculations used in project management and federal programs for eligibility purposes. For this example, let’s take a look at using the first method from above. Your average number of full-time equivalent employees during the reference period was 5.