What Is Full-Time Equivalent FTE?
Various combinations can be created depending on the needs of the business. Let’s say that a full-time weekly schedule in your company is 40 hours per week, and your employees are scheduled with 40 hours of work a week (which makes them full-time employees). This is a straightforward example since each employee who works 40 hours per week in your company has a 1.0 FTE. Contractors may or may not be included in FTE calculations, depending on their classification and the organization’s policies. Generally, contractors are not counted as FTEs unless they are considered equivalent to full-time employees. Employers may use the FTE calculation for different purposes, such as benchmarking revenues or profits per employee.
How Do You Convert FTE to Hours?
HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI https://www.bookstime.com/ law. Determining the FTE of your company is crucial for its productivity. Imagine that, with the same FTE, an employee can deliver 100 units, while another only delivers 30. The underlying period can be, for example, a day, a month or even a year.
How to calculate headcount
To determine whether a company is an Applicable Large Employer (ALE), the ACA says that a company must have an average of 50 or more FTE employees over the course of one year. The ACA considers a full-time employee one who works at least 30 hours per week. This is where the concept of the full-time equivalent (FTE) employee comes in. This is done by counting somebody who works half as much as a full-time employee as half an employee, and so on. It might sound cold, but it’s a vital metric when companies are applying for government loans, and when determining whether the company is large enough to have to follow certain laws.
What Is Full-Time Equivalent (FTE) & How Is It Calculated?
You’ll also need to know the actual number of weekly work hours to complete the FTE calculation. 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. For the purposes of calculating FTE, most employers consider a full-time employee one who works between hours a week.
FTEs calculator for the small businesses tax credit program
And some state and federal employment laws only apply to companies who meet a certain threshold of FTE employees. To convert an employee’s full-time equivalency into standard hours, multiply their FTE rate by 40. For example, if an employee has an FTE of 0.80, multiplying that number by 40 means that an employee works 32 hours a week. Most US companies adhere to the standard 40-hour, five-day workweek. However, many employers have experimented with a 4-day workweek in recent years. Add the full-time FTE (in this case, it’s 2.0 since there are two full-time employees) to the part-time FTE from the previous step (1.5).
What is Full-time Equivalent (FTE) & How to Calculate It
For more support in calculating your organization’s Full Time Equivalent, download our free FTE Template and streamline your staffing calculations for efficient resource allocation. Omni helps you track, analyze and gain actionable insights fte meaning from employee data through an automated and digitized platform. Easily and quickly gather the data you need to calculate your organization’s FTE so you can spend more time on the strategic planning necessary to drive business outcomes.
- Too often, HR will look at headcount metrics or other metrics in isolation rather than determining what these metrics mean from a business perspective.
- FTE data also informs decisions related to staffing levels, budgeting, and resource allocation.
- This tells you how many FTE employees your part-time workers add up to.
- The ACA considers a full-time employee one who works at least 30 hours per week.
- Linking performance with business outcomes in headcount reports will provide real value to business leaders and help you meet organizational goals.
- Salaried employees who work full time or are expected to work a full-time schedule (even if they don’t report their actual hours each week) are considered full-time employees in both cases.
Whether you want to calculate an FTE for an individual employee (part-time or full-time) or determine the FTE within your entire organization, take a look at the following calculations for further information. With FTE, you can figure out when to hire and whether a full time employee or a part time employee is required. Simply put, full-time equivalent is the total number of hours worked by an employee to meet the requirement for full-time status. You can apply different methods for different classifications of employees, as long as you apply the method consistently within each classification. Once you have a total number of hours, divide by 2,080 and round down for your FTE.
Example Calculation
