A full-time equivalent (FTE) calculation is normally used as a way to analyze an industry or to measure an employee headcount for projects, profits, or revenues. It’s also incredibly useful for business owners to stay compliant with the Affordable Care Act (ACA) or other laws. Nowadays, many business owners must calculate their FTEs in order to receive Payment Protection Program (PPP) loan forgiveness. Business owners must prove that they maintained the same number of FTEs during the 24-week period to receive full loan forgiveness.
No matter the case, if you need to learn how to calculate FTEs, we’ve got you covered.
What is a Full-Time Equivalent?
A full-time equivalent (FTE) is a measurement used to show the average hours worked by a single employee on a full-time basis. The calculation indicates the workload of an employed person that could be comparable on similar circumstances. According to the U.S. Treasury Department, a full-time equivalent employee is any employee who works 40 hours a week or more. That being said, these calculations are used by adding your part-time and full-time employment count together.
Calculating FTEs
The Government Accountability Office defines an FTE as “The total number of regular straight-time hours (i.e. not including overtime or holiday hours) worked by employees divided by the number of compensable hours applicable to the fiscal year.” Therefore, on an annual basis, an FTE is about 2,080 hours. Employees who work more than 40 hours a week count as one FTE. Any employees who work less than 40 hours a week will have their hours added together to obtain their value. To get your total figure, you must add your full-time and part-time FTEs together.
Please note that those who applied for a PPP loan have a simpler process. The Small Business Administration has alternatively allowed business owners to use 1.0 FTE for full-time employees and 0.5 for all other employees. It will make the math a lot faster!
How to Calculate Your Number for Part-Time Employees
- First, you must add all of your part time workers together to find your total (most part-time employees work less than 30 hours a week).
- Next, write down the average amount of hours your part-time employees work each week. Add their average numbers together. For example, if you have 5 employees working at an average of 20 hours per week, you’ll have a total of 100 hours.
- After that, take the total and divide it by 30, and you’ll have your part-time FTE number! Taking the example above, 100/30 is 3.3. Altogether, your employees equal to 3 FTE after rounding to the nearest whole number.
How to Calculate Your Number for Full-Time Employees
Calculating this for your full-time employees is simple! Just multiply the number of full-time employees who work 40 hours a week by 1. For example, if you have 20 full-time employees, their value is 20 FTEs.
How to Calculate Your FTE Total
You must add your full-time and part-time FTEs together to get your total FTE.
- First, you must add all of your part-time workers together.
- Next, write down the average amount of hours your part-time employees work each week. Add those numbers together.
- After that, take the total and divide it by 30, and you’ll have your part-time FTE number.
- Round down to the nearest whole number.
- Add your full-time employee count to the number you received in the previous step. Once that is done, you’ll have your total FTE number.
For example:
Let’s say that you have 20 full-time employees and 10 part-time employees. Each of your part-time employees work about 25 hours a week on average. To get your total FTE you just have to multiply 10 by 25, which is 250. Next, divide 250 by 30 and you’ll get 8.3. Round down, and you’ll have 8 FTEs. Next, add your full-time employee count (which is 20) with 8, and you’ll have an FTE number of 28.
Calculating FTE is pretty simple, and most payroll providers provide PPP loan support.
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