FTE (Full-Time Equivalent)

FTE, or Full-Time Equivalent, is a unit of measurement used to represent an employee's workload in a way that makes workloads comparable across various employment types. One FTE equals the workload of a full-time employee, typically based on a 40-hour workweek. Employers, especially in budgeting, staffing, and compliance with labor laws (like the Affordable Care Act), use FTEs to calculate the total number of full-time equivalent employees, even if the workforce includes part-time, seasonal, or variable-hour workers.

Key Facts

• Definition: One FTE usually equals one employee working 40 hours per week (2,080 hours annually).‍
• Calculation: Total hours worked by all employees ÷ Full-time hours (for example, 2,080 per year) = FTEs.‍
• Use Cases: Workforce planning, ACA compliance, benefits eligibility, grant applications, budgeting, and financial analysis.‍
• ACA Compliance: Businesses with 50+ FTEs are considered Applicable Large Employers (ALEs) and must provide health insurance.‍
• Includes Part-Time Work: Two part-time employees working 20 hours each/week = 1 FTE.

1. What does FTE stand for?

FTE stands for Full-Time Equivalent and is used to measure an employee’s workload relative to a standard full-time schedule.

2. How do you calculate FTE?

Add the total number of hours worked by all employees in a period and divide by the number of hours considered full-time (for example, 40 hours/week or 2,080 hours/year).

3. Why is FTE important for employers?

FTE helps employers manage staffing levels, budget effectively, determine benefits eligibility, and comply with laws like the Affordable Care Act (ACA).

4. Is a part-time employee considered in FTE calculations?

Yes. Part-time hours are converted into a fraction of an FTE. For example, an employee working 20 hours/week is 0.5 FTE.

5. How many hours equal 1.0 FTE?

Generally, 1.0 FTE equals 40 hours per week or 2,080 hours per year (52 weeks × 40 hours).