FTE stands for full-time equivalent, and it’s a way employers measure how many full-time employees they have, along with the number of part-time employees that can be translated into full-time terms.
What is an FTE employee?
An FTE is a measurement associated with the number of full-time hours being completed at your company. The number is tallied using your part-time and full-time employee count, in addition to a few simple calculations.
To reach your FTE count, you’ll have to convert the number of hours worked by your part-time employees to what they would look like on a full-time basis. After that, your full-time employees are added into the final FTE count.
Why does my FTE number matter?
Your FTE number determines whether you’re seen as an applicable large employer (ALE).
Being an ALE means that last year you had 50 or more employees, or a blend of full- and part-time workers that equaled 50 FTEs.
If your company is an ALE, it means you’re required to offer group health insurance under the Affordable Care Act’s employer mandate. Having ALE status also means that you need to send in your 1094-C and 1095-C forms describing the kind of coverage you provided to your team.
How do I calculate my FTE number?
It’s pretty easy. Grab a pencil, open your notebook, and we’ll show you exactly how to calculate your FTE count.
Step 1: How many part-time workers do you have? According to the IRS, part-timers are those who work less than 130 hours a month, or 30 hours a week.
Step 2: Write down the average number of hours each part-time employee works per week. Now, add them all together.
Step 3: Take the result and divide it by 30.
Step 4: Round down to the nearest whole number.
Step 5: Add your full-time employee count to the number you got above.
Step 6: You now have your FTE number. That’s it!
Here’s a quick formula that summarizes the FTE calculation above:
Your FTE number = (Total average of part-time hours worked per week / 30) + # of full-time employees
If you are an ALE, and use PayNortheast for your payroll, timekeeping and HR needs, your ACA requirements will be completely handled by PayNortheast.
Quick note: This is not to be taken as tax, legal, benefits, financial, or HR advice. Since rules and regulations change over time and can vary by location, consult a lawyer or HR expert for specific guidance.