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full time equivalent definition

In the context of the Health Care Reform Act, The Affordable Health Care Act requires the calculations that determine whether a business is classified as owned by a large employer or a small business. These calculations are used to clarify the company’s obligations regarding employee health benefits. FTE will influence how many hours employees can accrue for PTO. The actual PTO an employee can accrue may depend on several factors, including years of employment that dictate an full time equivalent employee hourly PTO accrual rate. These rates will depend on 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 with 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.

full time equivalent definition

Using Hours for data entry will directly save the specified hours . A full-time employee is equivalent to an FTE of 1.0, while an individual with half the workload makes up an FTE of 0.5. Options on Securities are included even if, technically, they are issued by the Options Clearing Corporation or a similar entity. Dividend Equivalent Unit means the right to receive a payment, in cash or Shares, equal to the cash dividends or other distributions paid with respect to a Share. Total effective dose equivalent means the sum of the deep dose equivalent for external exposures and the committed effective dose equivalent for internal exposures. Dose equivalent means the product of the absorbed dose in tissue, quality factor, and all other necessary modifying factors at the location of interest.


To determine whether a company is an Applicable Large Employer , the ACA says that a company must have an average of 50 or more FTE employees over the course of one year. The ACA considers a full-time employee one who works at least 30 hours per week. If you are such an employer, then you are eligible to apply for a tax credit in the amount of 50% of employer-paid health care premiums. To calculate the full-time equivalent for part-time employees, add up their work hours and divide that number by 120. The expected length of a full-time schedule has changed a lot through history — full-time employees now work about 20 or 30 hours per week less than they did in the 19th century. It could require 15 full-time employees (600 hours/40 hours) five days to complete, 30 part-time employees five days to complete, one full-time employee 15 weeks to complete, or a combination of these.

  • There are some exceptions when calculating FTE for the purposes of the small business tax credit.
  • Full Time Equivalent” or “FTEmeans full time equivalent of GCOR research and development personnel including direct and indirect costs.
  • Some businesses list this information in their employee handbooks or offer letters.
  • Determine the payment amount by taking how many employees you employed in each month, minus up to 30 like before, but multiply by however many months out of 12 total and multiply by USD 2,700.
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  • Even today, these numbers greatly vary across countries, from the Netherlands and its average of 29 hours and 18 minutes per workweek to Columbia and its average of 47 hours and 43 minutes per workweek.
  • Full-time equivalent is a unit to measure the total number of hours employees work.

Figuring out exactly how many people work for a company is more complicated than asking for a show of hands. And while they’re all valued as part of the company, there are certain situations in which they’re not considered in the same way when calculating your headcount. Whereas, employees that works 20 hours per week are considered 0.5 FTEs. Let’s say that you need to calculate the total amount of hours, time, and money required for your business to run successfully..

Full-Time Equivalent (FTE)

Two workers working 15 hours weekly would be considered part time and their combined FTE would be one. This definition is the most commonly used to determine how many FTE you have for ACA purposes. Both Carole and Lynn in our example above would be full-time employees under this example. FTE is calculated by taking the total number of hours worked by part-time employees in a week, month, or year plus the total number of hours worked by full-time employees and dividing by the average number of hours worked by full-time employees. (For a year, that is 2,080 hours with 40-hour workweeks and 1,560 hours with 30-hour workweeks, which is considered full-time for ACA reporting).

full time equivalent definition

This is where the concept of the full-time equivalent employee comes in. This is done by counting somebody who works half as much as a full-time employee as half an employee, and so on. It might sound cold, but it’s a vital metric when companies are applying for government loans, and when determining whether the company is large enough to have to follow certain laws. FTE is frequently used to assess an employee’s workload and its contribution to a project, or to track cost savings in a company.

Related Definitions

A full-time employee is considered to work at least 30 hours per week on average. In general terms, full-time equivalent is a unit of measure that plays a role in calculations used in project management and federal programs for eligibility purposes. The U.S. Office of Management and Budget, or OMB, the President’s budget office, will often place upper limits on the total number of FTE that a given agency may utilize each year. In the past, if agencies were given a ceiling on the actual number of employed workers, which was reported on a given day of the year, the agency could employ more than this number for much of the year. Then, as the reporting deadline approached, employees could be let go to reduce the total number to the authorized ceiling on the reporting date. Full-time equivalent person, equal to the number of total scheduled person hours divided by the number of hours per week which constitute a full-time person (e.g., 40 hours, or 35 hours). FTE may consist of several part-time individuals whose combined work hours in a week equal the full-time person, but may not incur benefits expenses.

  • Interest Equivalent means a yield on a 360-day basis of a discount basis security which is equal to the yield on an equivalent interest-bearing security.
  • According to the ACA’s definition of ALE, full-time employees work at least 30 hours per week on average, usually calculated based on the prior year’s FTE information.
  • Under normal circumstances, a full-time employee works 8 hours a day for 5 days a week.
  • You’ll also need to know the actual number of weekly work hours to complete the FTE calculation.
  • ALEs are required to offer affordable health coverage of minimum value to all full-time employees and their eligible dependents.
  • To be required to provide COBRA continuation coverage, a company must employ at least 20 full-time equivalent employees on more than half of its working days in the past year.

​​FTE is the full-time equivalent hours that all the employees in your business represent. To calculate the monthly FTE for a project, divide the monthly hours needed for the project by an employee’s full-time work hours in a month.

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