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SHRM Members enjoy unlimited access to articles and exclusive member resources. If you have at least 50 FTEs employees, you are an ALE for the year, which means you are subject to specific reporting requirements and share responsibilities under the ACA. The IRS Taxpayer Advocate Service has an Employer Shared Responsibility Provision (ESRP) Estimator to help you determine FTEs and see if you qualify as an ALE. FTEs are calculated in different ways for different accounting uses or for calculating eligibility for different federal programs. 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.

Checking an employee’s FTE with Clockify

Based on a 40-hour FT workweek, you’d need two full-time workers and one 0.5 FTE part-time employee. FTE calculations are about hours worked rather than number of employees. Amir, Mark, Phyllis and Sue could each work 10 hours per week and the total would be 40 hours worked, or one FTE fte meaning based on a 40-hour workweek. 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.

How To Calculate FTE for Better Resource (And Budget) Management

For example, you’ll want more hands on deck in a restaurant during the busy holiday and summer seasons. In the construction industry, you’ll need a larger headcount when a bigger project comes along. It’s easier to plan for this when you can visualize your project needs and team capacity.

Benefits of Calculating FTEs

Here’s how employers and employees can successfully manage generative AI and other AI-powered systems. Some laws, such as the Affordable Care Act (ACA), specifically define how an FTE is calculated and require employers to count FTEs to determine how the law applies to their organization. Jennifer Soper has 25+ years of writing and https://www.bookstime.com/articles/startup-bookkeeping content design experience, working with small businesses and Fortune 100 companies. Knowing your number of FTEs is important for assessing business performance, and it’s required under the Affordable Healthcare Act (ACA) and for certain tax credits. The method for calculating FTE is slightly different for each of these uses.

Bonus FTE calculators

– 5 p.m.” If employees take a one-hour lunch, then the available hours per workweek is 40 hours (eight hours a day x five days a week). It is sometimes useful to know how the total number of full-time and part-time employees are working in a business. But, in many situations, a business needs to view or report its staffing level in terms of full-time work. Full-time equivalent, or FTE, measures the total amount of full-time employees working at any one organisation. It is a way of adding up the hours of full-time, part-time and various other types of employees into measurable ‘full-time’ units.

FTE Calculation in Paycheck Protection Program Loan Forgiveness

• To convert an employee’s full-time equivalency into standard hours, multiply their FTE rate by 40.
• If that’s not the case in your country or state, just adjust the numbers to reflect the labor laws you adhere to and your business practices.
• Being a basic criterion in staff controlling, it is one of the most important staff indicators for companies.
• If your total full-time hours are 30 per week, divide the number by 1,560.
• The key thing to remember with headcount is that it is one metric, and in isolation, does not provide a clear, accurate picture of what’s going on in a business.

In this article, we will not only explain to you the FTE meaning, but we will also provide examples, helping you fully understand how to calculate FTE for your company. Plus, you’ll need to understand what FTE is and how to perform the FTE calculation if you want to apply for the Paycheck Protection Program (PPP) loan forgiveness program. And don’t forget to check out our dedicated Paycheck Protection Program Loan Calculator.

This will give you your total FTE for all full- and part-time employees for the year. You can use the FTE total each week, month, or year to determine company growth. You can also use the FTE total to remain compliant with federal, state, and local labor laws that may be based on employer size such as mandatory sick time laws. Knowing how many full-time equivalent employees you have is beneficial for several reasons. For one, it makes planning resources and workloads across full and part-time staff easier.

In general terms, full-time equivalent (or FTE) is a unit of measure that plays an important role in calculations used in businesses, project management, or federal programs for eligibility purposes. Managing employees, time tracking, overtime, and time-off data in disparate systems is complicated. Join us on this webinar case-study to see how Vimeo was able to leverage the BambooHR and Boomr integration to simplify their workforce management and streamline their processes. Bring the power of award-winning HR software to time tracking for your employees, managers, and payroll team. The ratio of full-time to part-time employees impacts company culture, engagement, and retention. Full-timers often identify more closely with company mission and values.

Now add the total number of hours worked by full-time employees to that of part-time employees to get the total number of hours for all employees. Add the total hours worked by part-time and full-time employees. Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes.