How to calculate FTEs to determine ALE status

fte calculation

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. Compute the number of hours worked by full-time employees per period. A full-time employee is someone who works a maximum of 40 hours every week for over 120 days every year. If an employer has fewer than 50 FTEs, they aren’t considered an ALE nor are they required to offer health coverage to their employees or pay a penalty. However, it’s a good idea for businesses to offer health benefits to maintain morale and increase employee retention.

How much FTE is 3 days weekly?

Another way to determine the FTE is based on how many days a week a person works. If an employee works 3 full days per week, the FTE is 3 working days / 5 weekdays= 0.6 FTE.

Create a thorough allocation report by determining productivity figures for each employee (depending on their role/department). Meet with your management team, trusted employees, and other stakeholders and compare your figures to their on-the-ground experiences. Take into account seasonal and annual growth trends, making use of your most current market analysis figures. Yearly FTE equals the hours one full-time employee works in a year. Though I’ll use yearly figures in my examples, you can gain useful insights by calculating monthly FTEs. The first FTE question you need to ask is “How many work hours are there in a year? ” – knowing full well that your part-time employees don’t work as many hours as your full-time employees.

The Importance of Determining FTEs

Divide this total number with 40, and then round the total to the nearest tenth to get the total FTE. Thus FTE, termed Full-Time Equivalent is a unit that represents the total hours worked by a full-time employee on a regular basis.

  • Alternatively, the number of hotel guest occupants may be derived from actual or historical occupancy.
  • Identifying which employees are FTEs is essential for a number of reasons ranging from workforce planning to adhere to employment laws under the Affordable Care Act.
  • Using the same formula, the number of part time hours worked amounts to 5,000 hours per year.
  • To calculate FTE, identify the total number of hours worked by part-time employees during a particular time period.
  • Plus, knowing your company’s FTE count will help reduce overall costs by forecasting employee hours and salaries.
  • You just need to add the total amount of hours worked by all of your employees and divide it by 40h.

30-Hour a Week Example – If full-time in your company is 30 hours, then every employee who works 30 hours a week or more is considered full time. Two workers working 15 hours weekly would be considered part time and their combined FTE would be one. This definition is the most commonly used to determine how many FTE you have for ACA purposes. Both Carole and Lynn in our example above would be full-time employees under this example. It is critical for accounting purposesand determining wages, and for calculating the company’s expenses when paying its workers. 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.

FTE calculation methods for federal programs

The ACA makes health coverage a shared responsibility of individuals, employers, and the government to ensure that as many people as possible have affordable health insurance. While the law doesn’t require all U.S. employers to offer health insurance to their workers, employers have several ways to confirm their ALE status. Proper calculations are crucial for the organization to ensure they’re meeting employer mandate regulations, submitting proper reporting, and avoiding costly penalties. Full-time equivalents help managers, business owners, and HR team members better understand existing costs to the business, as well as more effectively plan for future hiring needs.

fte calculation

Peak inpatients are the highest number of inpatients at a given point in a typical 24-hour period. Volunteers who regularly use a building are synonymous with employees for the purpose of LEED calculations. Staff is synonymous with employees for the purpose of LEED calculations. Following the above definition, an FTE of 1.0 is equivalent to a full-time worker while an FTE of 0.5 signals half of a full workday. For buildings with more unusual occupancy patterns, you would still calculate the FTE building occupants based on a standard eight-hour occupancy period. Seeing the accrual of leave in real time makes it easier to calculate the resources needed at any given time.

What does FTE mean in salary?

This is particularly true for large organizations that employ a variety of full-time, part-time, and flexible staff. For example, let’s say you have a 100-hour project to complete within a week. Based on a 40-hour FT workweek, you’d need two full-time workers and one 0.5 FTE part-time employee. In this example, your company has the equivalent of 5.24 full-time employees, or a 5.24 FTE. By this measurement, your four part-time workers amount to just less than one and one-quarter of a full-time equivalent employee.

One FTE equals 2,080 hours per year and the total number of employees is taken into account rather than the number of hours they have worked. Certain employees are not included in the calculation such as owners, partners, shareholders, family members or relatives, and seasonal workers who work fewer than 120 hours per year. Rather than hiring new employees, businesses can use FTE to deploy staff across various departments thereby keeping costs down. Depending on the type of work that is required, management can decide the number of full-time employees that are needed for a particular project and assign employees to those positions accordingly.

Method 3 of 3:Obtaining and Using Professional FTE Calculations

When a business employs a significant number of part-time staff, it can be useful to convert their hours worked into full time equivalents, to see how many full-time staff they equate to. The FTE concept is used in a number of measurements that compare headcount to revenues, profits, or square footage. The concept is also useful for comparing headcount levels among the firms within an industry, as part of an industry analysis.

The ACA considers a full-time employee one who works at least 30 hours per week. We’ll assume that where you are, full-time employment means working 8 hours a day, 5 days a week, for 52 weeks a year. Benefits like paid time off and maternity/paternity leave are all included within the number of hours worked, so don’t worry about accounting for these hours. This indicates that the combined hours of your three part-time employees , when divided by your regular full-time workweek , equals two FTEs. Some employers consider anything over 35 hours per week to be full-time, while others require that employees work 40 hours per week to be considered full-time.

And some state and federal employment laws only apply to companies who meet a certain threshold of FTE employees. For example, measuring FTE from month to month, or even week to week, helps to track overall workloads and expected employee output, even as part-time schedules chop and change. This could refer to either a single full-time employee or two or more part-time employees whose contributions add up to the equivalent of one full-time worker. Prepare a list of all the employees paid with a year-end W-2 form. Deduct approved leave hours, such as paid time off and sick leave. In our hypothetical scenario, our company has the equivalent of 52.40 full-time employees. With the required inputs in place, we can arrive at approximately 52.40 FTEs by dividing the total hours worked by all employees by the total number of available work hours in a year.

fte calculation

Maybe your team needs extra help from temporary workers or new hires. Or perhaps some of your part-time employees can put in additional hours to pull the weight of a larger project. For example, an employee working 20 hours per week is considered half a full-time employee (if the employer considers a 40-hour fte calculation workweek full time). As long as the employee’s hours add up to 40 hours per week, it doesn’t matter what hours and days they work. Since FTE considers the total time worked, it provides flexibility. This is critical in today’s workplace, with more people working remotely and with flexible hours.

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