Career Management Skills / Career Advice

Full-Time Equivalent (FTE): Definition and Calculation Guide




What is FTE?
FTE stands for Full-Time Equivalent, a metric representing the total number of full-time employees a company employs, including part-time workers converted into full-time equivalents. It's commonly used in workforce planning, budgeting, and compliance with laws like the Affordable Care Act (ACA).

How to Calculate FTE

  1. List Employees and Hours Worked
  2. Exclude independent contractors.

  3. Record hours worked by both full-time and part-time employees.

  4. Define Full-Time Hours

  5. Decide what qualifies as full-time (e.g., 40 hours per week).

  6. Employees working less than this are part-time.

  7. Calculate Full-Time Annual Hours

  8. Multiply full-time weekly hours by 52 (e.g., 40 hours x 52 weeks = 2,080 hours/year).

  9. Sum Up Hours

  10. Add up total hours worked annually by full-time employees.

  11. Add up total hours worked annually by part-time employees.

  12. Determine Part-Time FTE

  13. Divide total part-time hours by annual full-time hours (e.g., part-time hours ÷ 2,080).

  14. Calculate Total FTE

  15. Add full-time FTE and part-time FTE.

Example Calculation

Scenario: A company employs four people: - 2 full-time employees working 40 hours/week. - 1 part-time employee working 30 hours/week. - 1 part-time employee working 20 hours/week.

  1. Full-Time Hours: 40 hours/week x 52 weeks = 2,080 hours/year.
  2. Part-Time Hours:
  3. Employee 1: 30 hours/week x 52 weeks = 1,560 hours.
  4. Employee 2: 20 hours/week x 52 weeks = 1,040 hours.
  5. Full-Time Hours Total: 2 employees x 2,080 = 4,160 hours.
  6. Part-Time Hours Total: 1,560 + 1,040 = 2,600 hours.
  7. Part-Time FTE: 2,600 ÷ 2,080 = 1.25 FTE.
  8. Total FTE: Full-time (2.0 FTE) + Part-time (1.25 FTE) = 3.25 FTE.

Result: 4 employees = 3.25 FTE.

FTE and ACA Compliance

  • ACA Standard: 30 hours/week or more equals 1 FTE.
  • Requirement: Employers with 50+ FTEs must provide ACA-compliant health benefits.
  • Adjust FTE calculation for part-time employees accordingly.

Frequently Asked Questions

  1. What is 0.9 FTE?
  2. 90% of a full-time schedule.

  3. For 40 hours/week: 40 x 0.9 = 36 hours/week.

  4. FTE vs. Headcount

  5. Headcount: Total number of employees (e.g., 4 employees = headcount of 4).

  6. FTE: Adjusts hours worked to full-time equivalents (e.g., 4 employees = 3.25 FTE).

  7. What does FTE 100% mean?

  8. A full-time employee (40 hours/week or as defined by the company).

  9. How does FTE affect salary?

  10. A part-time worker earns a proportional salary based on FTE.

  11. Example: Full-time salary = $100,000.

    • 0.5 FTE (20 hours): $50,000.
    • 0.75 FTE (30 hours): $75,000.

  12. What FTE is 30 hours/week?

  13. For 40 hours/week as full time: 30 ÷ 40 = 0.75 FTE.

FTE simplifies workforce management, ensuring clarity in budgeting, compliance, and forecasting!

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