For weekly calculations, FTE equals total hours worked divided by standard weekly hours (e.g., 40 hours). Monthly FTE is total hours divided by standard monthly hours (e.g., 160 hours). Yearly FTE divides total hours by standard yearly hours (e.g., 2,080 hours). Part-time and seasonal workers contribute to FTE by calculating their hours worked as a proportion of full-time hours. For example, if a part-time employee works 20 hours per week and standard full-time hours are 40, their FTE would be 0.5. Similarly, seasonal workers’ hours are prorated based on their duration of employment.
- So the FTE is not the number of employees in a company, but the equivalent of a full-time employee.
- The Paycheck Protection Program (PPP) provides funds for small business owners to help them cover up to 24 weeks of payroll or other costs such as utilities, rent, etc.
- For the SBA calculation method #1, to get the FTE, enter the number of full-time employees and the total sum of work hours by part-time employees.
- Calculating Full-Time Equivalent (FTE) is a fundamental aspect of workforce management.
Common Mistakes in FTE Calculation
While we strive to provide up-to-date and accurate information, we do not guarantee the accuracy, completeness and timeliness of the information on our website for any purpose. We are not liable for any damage or loss arising from the use of the information on our website. FTE plays a huge role in resource planning for companies across various industries. HR must always include https://www.bookstime.com/ human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI law. There are companies that have a significant number of people working part-time, i.e., workers who spend only a short time in the company.
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Employers can also monitor workloads for future budgeting and staffing with FTE. However, many employers have experimented with a 4-day workweek in recent years. Add the full-time FTE (in this case, it’s 2.0 since there are two full-time employees) to the part-time FTE from the previous step (1.5). Effective workforce planning is essential for the long-term success of your organization. FTE provides valuable insights for making informed decisions about your workforce, ensuring you have the right talent in place to meet your objectives.
- Effective workforce planning is essential for the long-term success of your organization.
- This calculation is necessary for accurate HR budgeting, resource allocation, and workforce planning purposes.
- The full-time employees work 40 hours per week and 52 weeks out of the year, meaning that the number of full-time hours worked on an annualized basis is 104,000 hours.
- With FTE, you can figure out when to hire and whether a full time employee or a part time employee is required.
- You can apply different methods for different classifications of employees, as long as you apply the method consistently within each classification.
How to Calculate the Full Time Equivalent (FTE) in 4 Steps
The calculation of full-time equivalent (FTE) is an employee’s scheduled hours divided by the employer’s hours for a full-time workweek. When an employer has a 40-hour workweek, employees who are scheduled to work 40 hours per week are 1.0 FTEs. 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 (which makes them full-time employees). This is a straightforward example since each employee who works 40 hours per week in your company has a 1.0 FTE. FTE is an incredibly useful metric for organizations looking to assess and quantify the total labor resources available within their workforce.
Your FTE calculations must be accurate for IRS and Department of Labor (DOL) reporting. At 50 FTEs, you’re required by the ACA to provide health insurance to your employees and by the FMLA to allow employees to take up to 12 weeks of leave for qualifying conditions. FTE metrics serve as a cornerstone not only in workforce planning and financial forecasting but also play a pivotal role intalent management and development. Understanding how to calculate FTE is crucial for employers, as it provides a unified way to understand the work hours within their organization, helping in everything from budgeting to compliance.
There are different methods for calculating FTE, depending on the organization’s needs and the complexity of its workforce. Let’s dive in a little deeper on how FTE influences fte meaning hiring strategies. Running an organization can be like conducting a well-coordinated symphony, especially when it comes to maintaining a 12-hour working schedule,…
- Along with counting the hours worked, FTEs show how many full-time employees a particular company employs within a fiscal year or needs to employ to carry out a project.
- In our example, we will divide the total hours worked by Employees D and E by the number of hours worked by Employees A.
- Each FTE represents the fully loaded expense of having one full-time permanent employee on staff.
- That said, if interns are classified differently or their hours are not counted toward operational capacity, they should be excluded from your FTE calculations.
- Many laws and regulations related to benefits eligibility, overtime pay, and other workforce standards depend on whether an employee is classified as full-time or part-time based on FTE status.
- For example, if the FTE analysis reveals a heavy reliance on part-time workers, it might indicate the need to recruit more full-time employees to stabilize the workforce and reduce turnover rates.
The role of FTE in talent management and development
