Full Time Equivalent FTE Definition, How to Calculate, Importance

calculate full time equivalent

Now, let’s take a look at an example of calculating FTEs for the ERC. As a reminder, for employers who averaged fewer than 100 FTEs in 2019, the ERC is based on wages paid to all employees. Your tax credit is based on wages paid to employees who did not work during the period if your business averaged more than 100 FTEs in 2019. Say employees must work 40 hours per week to be considered full time. You have 20 full-time employees and 16 part-time employees who work about 25 hours per week. You are subject to employer shared responsibility if you have at least 50 FTEs on average during the previous calendar year.

In practice, FTE is measured by companies to estimate the number of full-time employees employed within a specific time frame. The Full Time Equivalent (FTE) represents a unit of measurement standardized to equal the number of hours worked by the typical full-time employee. Although FTEs may be referred to as a ‘one point oh’ or a ‘point eight’ with a single-digit decimal place, full-time equivalents are typically fte meaning reported with two decimals in most common scenarios. FTEs are not highly detailed lab samples, but rather just a way for us to get comparisons of how many hours are being worked in a period. In our experience, two decimals have always been the norm and this is how our software displays them. Please be sure to let us know if your organization routinely reports aggregated FTEs with more than two decimal places.

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The FTE Calculator simplifies the complex task of converting varying work hours into a standardized metric. This includes three full-time employees that work 40 hours per week. One part-time employee who works ten hours per week and one part-time employee who works 25 hours per week. To calculate FTEs and see if you qualify for tax credit, you can choose one of the said methods (we’ve provided calculators for each). If you, for instance, choose the first method, enter all the actual hours worked (including PTO) and divide that number with 2,080 to get the final FTE.

Based on an FTE of 1.0, we calculate employees work 2,080 hours per year. This value is used only as a basis for calculating the annual FTE and reflects the hours of an employee who works 5 days a week, 8 hours a day. 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.

Examples of calculating FTE

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. These rates will depend on the PTO accrual rate policies of a company, organization, or institution. Since both are https://www.bookstime.com/articles/how-to-calculate-salvage-value considered to be full-time schedules in their respective companies, both count as a 100% or 1.0 FTE. Five of them work full-time (40 hours per week), three occupy a part-time position each working 20 hours a week, and the other two each work 10 hours per week.

  • This is a straightforward example since each employee who works 40 hours per week in your company has a 1.0 FTE.
  • Within our software, our FTEs are entered either directly, or as a specific schedule over a 1, 7, 14, or 28-day period.
  • Appeared in G2 Crowd Learning Hub, The Good Men Project, and Pick the Brain, among other places.
  • For instance, in terms of business, calculating FTEs may be of great use when determining how many hours part-time employees should work to equal the number of hours full-time employees work.

With these tips, you can run a smoother business operation with a deeper level of understanding into your labor costs and needs now and in the future. Now determine the number of hours worked by full-time employees over a given period. Full-time employees are those who work a minimum of 30 and a maximum of 40 hours a week and more than 120 days a year. For employers who averaged fewer than 100 FTEs in 2019, the ERC is based on wages paid to all employees. If your business averaged more than 100 FTEs, your tax credit is based on wages paid to employees who did not work during the period.

What is an FTE Number?

The list should include the employee’s name and the number of hours they work per week. Make sure to exclude time allotted for paid leave and sick leave. Do not include 1099 contractors; they are not considered 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.

calculate full time equivalent

If your employees work the same number of hours every week, the calculation process will be simple. The list should contain the names of your employees as well as the full number of work hours for a single week. Try to include employee leave (both paid and unpaid) in the overall number of work hours to make your results more accurate. A single full-time employee represents an FTE of 1, while part-time employees have a 0.5 FTE (or half that of a full-time worker).