What a full-time equivalent is and how to calculate it

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. According to OECD statistics on average weekly hours worked on the main job from 2021, Denmark has an average of 33.7 hours per week compared to Columbia and its average of 47.8 hours during a workweek. The US falls somewhere in the middle when compared to other countries, with 38.8 hours of work time per week, on average. Divide that number by 2,080 (which is 8 hours x 5 days x 52 weeks, if you’re wondering) and boom – you have your FTE magic number. This is the number of full time equivalent staff you have on board. Your FTE employee is someone who works the entire workweek and his total working amount of hours are 2,800 hours per year, breaking down to 5 days a week, 8 hours per day.

• 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.
• Let’s say that a full-time weekly schedule in your company is 40 hours per week, and your employees are scheduled with 40 hours of work a week.
• For example, if your full-time employees work 40 hours per week and part-time workers average 20 hours per week, divide 40 by 20 and you’ll get 2, meaning two part-time workers equal one full-time employee.
• Since both are considered to be full-time schedules in their respective companies, both count as a 100% or 1.0 FTE.

With Clockify, you can easily track your cost rates per employee and then compare and contrast them with employee billable hourly rates. 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. Monique Danao is a journalist and freelance writer who has worked with several startups and tech companies. Her work has been published in Sitepoint, Fast Capital 360, Social Media Today, WPMayor among other publications.

Overcoming the 7 biggest time management challenges

A full-time equivalent employee is a worker with an FTE of 1.0, which will usually mean they’re employed full-time at your company. A full-time employee is considered to work at least 30 hours per week on average. Some labor laws and employee benefit programs are linked to how many employees a company has on its payroll. To ensure that a company with 100 part-time employees is treated as fairly as one with 50 full-time employees, an FTE is calculated to compare both workforces.

To help you determine if you are eligible for a small-employer healthcare tax credit, you need to count the number of employees employed in your company throughout the year. Add the total hours worked by part-time and full-time employees. This includes three full-time employees that work 40 hours per week.

How to Calculate the Full Time Equivalent

If a company considers 40 hours per week as the basis for a full-time position, then anyone working an amount of hours below this range is considered a part-time employee. The same logic is applied if a company considers 30 hours per week as the standard for a full-time position. The FLSA (Fair Labor Standards Act) doesn’t define full-time employment. Therefore, the FLSA generally applies equally to full-time and part-time employees.

• Using this system, you can quickly calculate how many people are needed for a project that requires X amount of labor hours — just divide the total hours by each person’s FTE and you’ll see how many people are needed overall.
• It shows the number of work hours of an employee compared to a full-time employee.
• The Affordable Care Act (ACA) is designed to reduce the cost of health coverage for uninsured and lower-income individuals and their families.
• With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year.
• The ACA legally requires that employers, individuals, and the government each help offer insurance to as many people as possible.
• Not every full-time employee is an FTE employee, since FTE status only includes employees who work hours contributing toward a 1.0 or 0.5 FTE measurement.

Do not include 1099 contractors; they are not considered employees. When you analyze staffing in terms of hours worked rather than number of employees, it gives a more accurate picture of business performance. imprest account allows you to calculate and analyze your workforce a lot more accurately, and also explains how much value and workload you’re getting out of part-time staff in comparison to a full-time baseline.

What Is the Purpose of Calculating FTE?

It’s unlikely that you only employ full-time employees in your company — you likely receive help from part-time employees or temporary workers. The full-time equivalency measurement lets you calculate the hours those employees work compared to a full-time workload. For a business, specifically those with a large number of part-time workers, converting worked hours into FTEs is important in helping the company know how many full-time employees the part-time workers are equal to. Therefore, eligible employees may obtain affordable and minimum health insurance coverage thanks to FTE calculations under the Affordable Care Act. Any employee having at least 30 working hours per week (or 130 a month) is considered a full-time employee under this act. A full-time position would equate to around 30 to 40 hours per week for most employers.

These rates will depend on the PTO accrual rate policies of a company, organization, or institution. However, bear in mind that this only applies to positions that work 30 hours per week when assigned 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. 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. 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. Essentially, the FTE is the number of determined full-time positions in an organisation.