Furthermore, 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. 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. The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees.
To calculate the full-time equivalent in your company for each employee, you’ll need to account for the hours of a full-time weekly schedule and the actual hours your employees are scheduled to work. Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees. Employers are free (unless otherwise required by law) to choose which base measurement https://www.bookstime.com/ unit (per day, per week, or year) for each employee to determine an employee’s overall FTE according to their selected criterion. Some criteria could include your headcount, required hours to perform specific activities and needed workload in certain periods or projects. The ACA requires that employers add all the hours worked by part-time employees in a month and divide by 120.
Why Calculate the Full Time Equivalent?
HR departments often use FTE salaries to determine their part-time workers’ compensation. A part-time employee’s FTE salary is calculated by multiplying their FTE value by the salary allotted to an equivalent full-time employee. For instance, fte meaning let’s say a full-time graphic designer working 40 hours per week makes $48,000 per year. A part-time graphic designer working 30 hours per week at that same company would have an FTE of 0.75 since they work 75% of that 40 hours.
- Generally, if you pay the employee a salary less than the minimum, the employee must be classified as non-exempt.
- The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees.
- Job offers are contingent upon successful completion of a post offer placement assessment including a urine drug screen, immunization review and tuberculin (TB) skin testing, if applicable.
- According to the Affordable Care Act (ACA), employers with 50 or more FTEs are required to offer ACA-compliant benefits.
- You typically would not include hours that owners or partners work within this calculation, but you can do so for your own accounting purposes if you want to include labor from ownership as part of your evaluation.
Try to include employee leave (both paid and unpaid) in the overall number of work hours to make your results more accurate. First, it is necessary to determine the number of hours worked by part-time employees. Based on an FTE of 1.0, we calculate employees work 2,080 hours per year.
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