FTE meaning: what full-time equivalent is and how to calculate it

1.0 FTE in budgets and job posts

In budgets and HR systems such as Workday, a position's FTE is its scheduled hours divided by the standard full-time week. With a 40-hour standard, 1.0 FTE is 2,080 hours a year (40 x 52), 0.5 FTE is 20 hours a week or 1,040 hours, and 0.8 FTE is 32 hours. A job post that says "0.6 FTE" means 24 hours a week. Pay and paid time off are often prorated by the FTE figure.

The ACA calculation, step by step

1. Count full-time employees each month: anyone averaging 30 hours a week, or 130 hours in the month.
2. Add the hours of everyone else for the month, counting no more than 120 hours per person, and divide by 120. That is the month's FTE count.
3. Add full-time employees and FTEs for each month of the prior year, then divide by 12. Drop any fraction.
4. 50 or more means you are an applicable large employer this year. One exception: if you went over 50 for 120 days or fewer, and only because of seasonal workers, you are not.

Example: 30 full-time staff and 25 part-timers

Twenty extra part-time hours a person a month moves this business over the line, which brings the employer mandate and annual ACA reporting. Your health plan options are in small business health insurance, ICHRA and QSEHRA. If you use a PEO, ask whether its fee covers ACA reporting; see PEO costs.

FTE vs headcount

Headcount is the number of people on payroll; FTE is the hours they represent. A team of 10 where 4 work half time is 10 heads and 8.0 FTE. Vendors price on headcount: payroll and PEO fees are charged per employee, so 4 half-time workers cost the same as 4 full-time ones. Model the real cost of each hire with the employee cost calculator.