What Is FTE? How To Calculate Full-Time Equivalent

The value of knowing your FTE depends on whether you’re looking for something specific in your business or organization. How to stay healthy while working night shifts Everything you need to know about working night shifts in 2023 — risks, tips, and FAQs are obligatorily included, so read on…. Finally, run reports to see what you construction bookkeeping charge your clients, what you pay your employees, and whether you are making a profit . Bear in mind that this is just the expected number of hours Olivia may work with a 0.7 FTE — she will likely use some of these hours for PTO. An employee with a regular budgeted assignment of 75% of a full-time job position has a 0.75 FTE.

Full-time equivalency is a metric that quantifies the number of full-time employees at an organization based on hours worked, and quantifies how many part-time employees add up to a full-time employee. For example, if your organization’s work week is 40 hours, two part-time employees who each work 20 hours in a week would equal one FTE. FTE calculations make project planning easier and more accurate because project managers know the actual capacity their team has, and the capacity required for a particular project. If a project manager has several projects at the same time plus several projects planned for the future, it becomes impossible to plan resources accurately without calculating FTEs.

How to calculate FTEs

Performance information may have changed since the time of publication. FTE refers to one full-time employee or the equivalent of a full-time employee. If you’re offering health coverage to remote workers, there may be some additional considerations. Read our employer’s guide to find out more about different types of insurance you can offer your employees.

Imagine you are a human capital manager who has lost four employees and needs to replace their hours. Two of these employees worked full-time hours , employee three worked 20 hours per week, and employee four worked 15 hours per week. To calculate the total FTEs for your business, you need to add up the hours worked by all employees, both full-time and part-time.

Example FTE Calculation

Using time tracking software, like Homebase, will allow you to run a historical report based on employee work history and status to gather the average hours worked using custom fields. In addition, Homebase provides small business employers with a range of scheduling options to ensure your staff hours are within the correct range. According to the IRS and the ACA, part-time employees work fewer than 30 hours a week on average. This could be an employee who works 20 hours a week, an intern who works one day a week, or an employee who is on call or only works weekends. It could also be a temporary staff member who works an irregular schedule. 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.

• An employee with a regular budgeted assignment of 75% of a full-time job position has a 0.75 FTE.
• For the purposes of calculating FTE, most employers consider a full-time employee one who works between hours a week.
• Eligibility for the Small Business Tax Credit Program — Applies to small businesses whose revenues have decreased or who have been shut down between the period of March 12, 2020, and December 31, 2020.
• FTE is also used in the United States to determine whether an employer is an ALE for the fiscal year.
• Employers can also monitor workloads for future budgeting and staffing with FTE.

Understanding your FTE can be very beneficial for project success, but if you consistently get it wrong it can lead to project miscalculations and delays. Finally, the third method is based on the weeks-worked equivalency. For example, at the University of Utah Health, eligible hospital and clinics staff members who work the equivalence of 0.50 to 0.74 FTE of a full-time schedule will accrue at 50% of the full-time benefit rate . Businesses use the FTE calculations for a variety of purposes, and the most common ones are presented below. We’ll also show you how to perform various calculations that involve FTEs, and provide you with automatic calculators that will help make the process easier.

How Horizons Can Help You Hire Full-Time Employees

That means that you have seven employees, totaling 170 hours per week. Whereas, employees that works 20 hours per week are considered 0.5 FTEs. Clockify is a time tracker and timesheet app that lets you track work hours across projects. Bear in mind that these are just simple FTE example calculations — project managers https://www.bollyinside.com/featured/the-primary-basics-of-successful-cash-flow-management-in-construction/ approach FTE from a different angle while federal programs use different FTE calculation methods. FTEs may also influence how many hours employees can accrue for PTO. The actual PTO an employee can accrue may depend on several factors, including years of employment that dictate an employee’s hourly PTO accrual rate.

• How to stay healthy while working night shifts Everything you need to know about working night shifts in 2023 — risks, tips, and FAQs are obligatorily included, so read on….
• The PPP is an SBA program that helps preserve a business in times of crisis.
• Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes.
• Full-time equivalent is a way for employers to standardize their headcount and combine their part-time workers’ hours to figure out how many full-time employees would work those hours.
• You’ll also need to know the actual number of weekly work hours to complete the FTE calculation.

In most cases, employers fall below the threshold required to be an ALE and are, therefore, not subject to the employer shared responsibility provisions. FTE goes even further than solely calculating project or staffing needs. If you employ 50 or more full-time equivalent employees then you are required to offer health benefits and coverage. FTE is also calculated to see whether or not you qualify for any tax credits. They also use it to calculate labor costs for the expected project workload and subsequently define the funds needed to finish a project. According to the Affordable Care Act , employers with 50 or more FTEs are required to offer ACA-compliant benefits.

Moreover, having accurate FTEs for all employees will also help employers determine responsibilities towards them, their PTO rates, and whether the business is eligible for certain federal programs. Once you decide why you want to use FTE, identify the appropriate calculation method, and follow it through. As stated in the Eligibility for the Small Business Tax Credit Program section above, small businesses are eligible for such a tax credit if they employ less than 50 full-time equivalent employees . However, the IRS mandates only 30 hours per week or 130 hours per month for an employee in the US to be considered full-time in terms of the type of employment.

The calculation is straightforward — divide the employee’s scheduled hours by the number of hours that represent an official weekly full-time schedule in a company (e.g., 40 hours per week). Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes. That said, full-time equivalent is a metric used to determine the total number of full-time workers that you have in an entire organization. In this article, we’ll teach you everything that you need to know about calculating this metric and why it matters.