Any employee who works an average of at least 30 hours per week for more than 120 days in a year. Part-time employees work an average of less than 30 hours per week. Show
Related Content
In general terms, full-time equivalent (or FTE, for short) is a unit of measure that plays a role in calculations used in project management and federal programs for eligibility purposes. In this article, we’ll talk about the basics of what FTE is, what it entails, and why businesses use it. We’ll also show you how to perform various calculations that involve FTE, and provide you with automatic calculators that will help make the process easier. What is full-time equivalent (FTE)?According to the full-time equivalent (FTE) definition, a full-time equivalent (also known as a whole time equivalent, or WTE, for short) is a unit of measure based on the total number of hours worked that shows how many full-time equivalent employees a certain company employs within a fiscal year, or needs to employ to carry out a project. To calculate the number of full-time equivalent employees, the total number of hours worked is compared with the number of hours that represent an official weekly full-time schedule in a company (e.g. 40 hours per week). Outside of the business environment, this unit of measure is also used to measure a student’s class load or involvement in a school project. What is a full-time equivalent employee?Considering that the FTE unit of measure is based on the total number of hours worked, it may not indicate the actual number of people working in a company. Here’s how full-time and part-time employees may equal 1 full-time equivalent employee in your company:
💡To track employee work hours and decide whether your employees are full-time equivalents, try Clockify, our free time tracker for teams. What is the purpose of FTE?Different federal programs have different ways to calculate FTE, and these calculations are used to determine:
FTE is also used to calculate the number of accrual hours for PTO, per employee. Moreover, project managers and budget analysts also use the FTE unit of measure to estimate how many hours (i.e. full-time schedules) will take to finish a project, and whether the said project will require full-time or part-time employees (and how many of each). They also use it to calculate labor costs for the expected project workload and subsequently define the amount of funds needed to carry out the project to its end. 💡Want an easy way to track your actual labor costs? Clockify lets you track your cost rates per employee and then compare and contrast them with employee billable hourly rates. First, define cost and billable hourly rates for each employee (or for your project or workspace on the whole), have them track the time they spend working on projects, and then run reports to see what you charge your clients, what you pay your employees, and whether you are making a profit (or have costs that exceed revenue). What is a typical official full-time schedule?The expected length of a full-time schedule has changed a lot through history — full-time employees now work about 20 or 30 hours per week less than they did in the 19th century. Even today, these numbers greatly vary across countries, from the Netherlands and its average of 29 hours and 18 minutes per workweek to Columbia and its average of 47 hours and 43 minutes per workweek. The US falls somewhere in the middle when compared to other countries, with 38 hours and 35 minutes of work time per week, on average. 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. In practice, these numbers still usually fall somewhere between 32 and 40 hours per week, with 40 hours per week (8 hours per day, 5 days per week) being a common norm for a full-time schedule. What is 100% FTE?A 100% FTE is the same as a 1.0 FTE — it may point to one person working a full-time schedule or several people fulfilling the duties of 1 full-time position. In one company, a full-time schedule may be 40 hours per week. In another, it may be 37.5 hours per week. Considering that both count as a full-time schedule in their respective companies, both count as a 100% or 1.0 FTE. An FTE calculation for all employees in a company needs to be rounded down to the nearest whole number (usually, 1.0 FTE or greater). On the other hand, the FTE for individual employees may be:
Examples of how to calculate FTE for individual employeesTo calculate full-time equivalent in your company for each employee, you’ll need to account for:
Example 1: Let’s say that the hours of a full-time weekly schedule in your company is 40 hours per week. Each employee who works 40 hours per week in your company has a 1.0 FTE. But, what about the employees whose contracts mandate they work less, such as part-time workers? Example 2: Say that a worker named Karen works 20 hours per week in the same company. To calculate her FTE, simply divide the actual hours Karen is scheduled to work by the full-time weekly schedule of your company: 20 / 40 = 0.5 FTE Example 3: The same would go for Arthur, who works 25 hours in a company where 38 hours is considered a full-time schedule: 25 / 38 = 0.6 FTE Calculating FTE for individual employees may help you decide whether your employees are eligible for certain programs, such as the Public Service Loan Forgiveness (PSLF) program. What is 75% FTE? When is 0.75 FTE or higher considered full-time?An employee who has a regular budgeted assignment of 75% of a full-time job position (usually amounts to 28 hours per week for non-exempt positions who work 37.5 hours per week under normal conditions or 30 hours for exempt positions who work 40 hours per week under normal conditions) has a 0.75 FTE. This does not apply to temporary job positions. Whether an FTE of 0.75 is considered full-time will depend on the company policy made by the employer. If 0.75 FTE is considered full-time in a company, such employees may qualify to apply for the Public Service Loan Forgiveness (PSLF) program. However, bear in mind that this only applies to positions that work 30 hours per week when assigned with a 0.75 FTE position, i.e. the IRS minimum for a full-time definition. In contrast, non-exempt positions who typically work only 28 hours per week on a 0.75 FTE schedule do not qualify, even if the employer policy defines them as full-time. What is an FTE salary? How to calculate an FTE salary?An FTE salary is an employee salary converted into a full-time equivalent salary within a full year, regardless of whether the said employee holds a full-time or part-time position. The actual workload is not taken into consideration for this calculation. Example: Let’s say that an employee has held a job for 6 months (0.5 time of a full year) at an FTE of 70% (0.7) and earned $12,000 during this time. The FTE salary calculation for this employee goes as follows: $12,000 / ( 0.5 x 0.7 ) = $34,285 per year FTE salary calculatorTo easily convert an employee salary into a full-time equivalent salary within a full working year, use this free calculator: ⏬ Download the FTE salary calculator in Excel ⏬ Download the FTE salary calculator in Google Sheets How many hours is…FTE? (FTE hours requirements)We already discussed how to use work hours to calculate FTE for individual employees. But, what if we start from an FTE to calculate work hours? For example, you may want to do this when you want to make an FTE offer to a new employee during a job interview. And, the actual number of hours attached to a FTE will also depend on your organization’s policy. For inspiration, let’s look at a chart compiled by Northern Michigan University. Here’s how they classify working hours for different assignment lengths, based on predefined FTE measurements within a fiscal year in 2020 and 2021:
When classifying FTEs and working hours in your company’s policy, you can follow suit, or define your own FTE measurements. How do you convert FTE to hours?To convert the number of hours your employee is expected to work based on his or her FTE, you’ll need to reverse the previously mentioned process of calculating FTE based on the number of hours worked. Example: Let’s say you have an employee named Olivia who has a 0.7 FTE in a company that counts 40 hours as a full-time schedule. How many hours does that mean Olivia works per year? If Olivia has a 0.7 FTE on a yearly basis, you’ll need to multiply her FTE with the average number of hours worked for a full-time work schedule in your company a year (40 hours per week x 52 weeks per year = 2,080): 0.7 x 2,080 = 1,456 hours per year 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. Why FTE is important for PTOFTE will 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 hourly PTO accrual rate. These rates will depend on PTO accrual rate policies of a company, organization, or institution. For example, at The University of Utah, eligible employees who work the equivalence of 0.50 to 0.74 FTE of a full-time schedule will accrue at 50% of the full-time benefited rate (distributed based on their FTEs). Examples of how to calculate FTE for all employeesTo calculate the FTE for all employees in your company, consider the full-time and part-time employees you employ: Example 1: A full-time employee working 40 hours in a company that views 40 work hours as a full-time schedule is counted as having a 1.0 or 100% FTE. In line with that, you may have 10 full-time employees, who’ll equal 10.0 FTEs in total (1.0 FTE each). However, if your company employees part-time employees as well, several of them together may equal 1.0 FTE. Example 2: A part-time employee working 20 hours in a company that views 40 work hours as a full-time schedule is counted as having a 0.5 or 50% FTE. Two such part-time employees together equal 1 full-time employee equivalent (0.5 + 0.5). In line with that, if you have 20 part-time employees, they will once again equal 10.0 FTEs (0.5 FTE each x 20). Now, this was a simple calculation — but, what if your part-time employees are NOT working exactly half of your company’s official full-time schedule? Example 3: Say you have 2 full-time employees and 5 part-time employees, out of which 2 work for 23 hours, 2 work for 25 hours, and 1 works for 28 hours per week. The simplest approach to calculate the FTE for part-time employees is to add up the listed hours (2 x 23 + 2 x 25 + 28 = 124) and divide that total by the number of hours that mark a full-time schedule in your company (once again, let’s say that that’s 40 hours per week): 124 / 40 = 3.1 In the end, round this down to the nearest whole number (3 FTE), and add the 2 full-time employees (2 FTE) to get the final FTE (5 FTE). FTE calculator for all employeesTo easily calculate the FTE for all your employees, use this free calculator: ⏬ Download the FTE calculator for all employees in Excel ⏬ Download FTE calculator for all employees in Google Sheets Bear in mind that these are just simple FTE example calculations — project managers approach FTE from a different angle while federal programs use different FTE calculation methods. How to calculate FTE to determine the headcount needed for a projectSay that you want to determine your resource requirements for a project estimated to take 600 hours to complete, and on which your team will work 8 hours per day. To calculate how many days your team will need to work to accomplish this, and how many people in the team you need to begin with, first, divide 600 by 8: 600 / 8 = 75 hours per day So, 75 is the number of hours needed per day to finish the said 600-hour project — it will be up to you to decide how many people you’ll want to employ to carry this out, and what type of employment you will offer to them.
As evident, once you have the total number of hours per day, you’ll be able to pick whatever days/employees ratio you want to carry out the estimated workload. 💡You can use Clockify to create project estimates, have your team track the time they spend working on the said project, and then make comparisons and track progress. To read more about how to improve your skills in making project estimates, check out our blog post about How to make precise work estimates. FTE calculator for project managersTo easily calculate how many full-time equivalent employees you need to finish a project, use this free calculator: ⏬ Download the FTE calculator for project managers in Excel ⏬ Download FTE calculator for project managers in Google Sheets FTE calculation methods for federal programsThe FTE calculation methods we’ll discuss here are concerned with calculating FTE for:
The FTE calculation methods for determining business sizeIn the context of the Health Care Reform Act, The Affordable Health Care Act requires the calculations that determine whether a business is classified as owned by a large employer or a small business. These calculations are used to clarify the company’s obligations regarding employee health benefits. The role of FTE in determining Applicable Large EmployersIf a company has over 50 FTEs, then its employer is classified as an Applicable Large Employer (ALE) for the year, and must meet specific requirements for two sections of The Affordable Care Act:
Here’s what you need to know to help you determine if you are an Applicable Large Employer for this year:
Here’s who you DO NOT include in the calculation:
How to use FTE to determine whether you are an ALE?To calculate the full-time equivalent for the actual full-time employees, simply do a headcount. To calculate the full-time equivalent for part-time employees, add up their work hours and divide that number by 120. Example: You have 50 full-time employees and 50 part-time employees. Out of the 50 part-time employees, 10 work 20 hours, 10 work 22 hours, 20 work 25 hours, and 10 work 28 hours. Here is the calculation that shows how many full-time equivalent employees they represent: 50 + (10 x 20 + 10 x 22 + 20 x 25 + 10 x 28)/120 = 60 full-time equivalent employees If your final FTE for all your full-time and part-time employees shows 50 FTEs or more, you are an Applicable Large Employer for the year. FTE calculator for ALETo easily calculate whether you are an Applicable Large Employer for this year, use this free calculator: ⏬ Download the FTE calculator for ALE in Excel ⏬ Download the FTE calculator for ALE in Google Sheets The role of FTEs in small business eligibilitySmall businesses are eligible for small-employer health care tax credit — they apply to employers who employ less than 50 full-time equivalent employees(and subsequently have less than 50 FTE for all employees in total). If you are such an employer, then you are eligible to apply for a tax credit in the amount of 50% of employer-paid health care premiums. Here’s what you need to know to help you determine if you are eligible for small-employer health care tax credit:
Here’s who you DO NOT include in the calculation:
How to calculate FTE for a small business for eligibility purposesThere are three methods to calculate FTEs for health care tax credit for small businesses. Each requires that you divide the number of hours by 2,080 to get the employee’s FTE: 1. The actual hours worked. Within this method, you add up all actual hours worked (this includes PTO). Example: An employee worked 2,000 hours within a year and spent an additional 80 hours during that year on time off: 2,000 + 80 = 2,080 hours of service / 2,080 = 1.0 FTE 2. Days-worked equivalency. Within this method, the employee is credited with 8 hours for each day he or she would be required to work at least 1 hour (this includes PTO). Example: An employee worked from 7:00 am to 12:00 pm every day for 100 days (5 hours worked per day for 130 days = 130 days an employee was required to work at least 1 hour): 8 x 130 = 1,040 hours of service / 2,080 = 0.5 FTE 3. Weeks-worked equivalency. Within this method, the employee is credited with 40 hours for each week when payment was due (this includes PTO). Example: An employee worked for 37 weeks, took 2 weeks for a paid vacation, and took 9 weeks for unpaid leave (you only count 37 weeks worked and the 2 weeks of paid vacation, without the unpaid leave): (37 + 2) x 40 = 1,560 hours of service / 2,080 = 0.75 FTE Whatever method you choose, repeat it for each employee, and add up the numbers to get the final FTE (round the number down). Alternatively, add up the hours of service for all your employees, and divide that number by 2,080. For example, 15,600 hours of service equal 7 FTE (15,600 / 2,080 = 7.5, rounded down). FTE calculator for small businessesTo easily calculate the hours of service per employee in your small business, use this free calculator: ⏬ Download the FTE calculator for small businesses in Excel ⏬ Download the FTE calculator for small businesses in Google Sheets The role of FTE in calculating eligibility for the Paycheck Protection Program (PPP)The Paycheck Protection Program, established by the CARES Act, provides funds to small business owners to help them keep their workers on payroll. More specifically, it helps small business owners cover up to 24 weeks of eligible payroll and non-payroll costs (before the Paycheck Protection Program Flexibility Act of 2020 was enacted on June 5th, this was 8 weeks. The borrowers that received loans before June 5th can still choose whether they will use the original 8-week covered period or the new 24-week covered period). The funds provided by the PPP will be fully forgiven if the small business owners:
*Prior to June 5th, 2020, the percentages were 75% for payroll costs and 25% for non-payroll costs. **Prior to June 5th, 2020, this date was June 30th, 2020. How to calculate FTE for PPP?To make sure you are eligible to have your loan fully forgiven due to maintaining the FTE in your small business, you’ll need to calculate your FTEs according to the calculation methods prescribed by the Small Business Administration (SBA): SBA calculation method #1
Example: You have 5 full-time employees who work 40 hours per week and 8 part-time employees who work 25 hours per week. 5 + 8 x 25 / 40 = 10 FTE Note: This method is the same as the example of how to calculate FTE for all employees discussed earlier. SBA calculation method #2 (the simpler alternative)
Example: You have 7 full-time employees who work 40 hours per week and 8 part-time employees who work 28 hours per week. In numbers, that would be: 7 + 8 x 0.5 = 12 FTE Note: Whatever SBA calculation method you choose to use, you’ll need to use it consistently for all calculation time periods. FTE calculator for PPPTo easily calculate FTE to check eligibility for full forgiveness in the Paycheck Protection Program, use this free calculator: ⏬ Download FTE calculator for PPP in Excel ⏬ Download FTE calculator for PPP in Google Sheets Summing upFTE has several different uses and several different calculation methods, depending on why you want to calculate it. It will help you plan your project work in regards to deadlines and your budget. Moreover, having accurate FTEs for all your 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. What is a 1.0 FTE position?An individual working a 40-hour week (80-hour pay period) for an entire year is considered a 1.0 FTE employee. An employee working a 20-hour week (40-hour pay period) for an entire year is considered a . 50 FTE employee.
What FTE is 10 hours per week?1 full-time employee working 40 hours per week = 1 full-time equivalent employee; 2 part-time employees working 20 hours per week = 1 full-time equivalent employee; and. 4 part-time employees working 10 hours per week = 1 full-time equivalent employee.
How is FTE calculated for partTo calculate the full-time equivalent for the actual full-time employees, simply do a headcount. To calculate the full-time equivalent for part-time employees, add up their work hours and divide that number by 120.
How many hours is 1 FTE per year?Yearly, a company generally considers an FTE to be valued at 2,080 hours.
|