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Small Business Employee Benefits and HR Blog

What are Full-time Equivalent Employees (FTE)?

The term "full-time equivalent" refers to the full-time equivalent of a company's part-time employees. It is often used to calculate the size of an company based on hours worked by all W-2 employees.

The number of full-time equivalent employees (FTEs) is equal to the company's full-time employees plus full-time equivalent part-time employees rounded to the lowest whole number.

To calculate the number of FTEs, the company should do the following:

First, the company should determine the number of full-time employees (i.e. those working 30 or more hours per week).

To calculate the full-time equivalent of part-time employees, a company should add the number of hours worked by part-time employees and divide the total by 120.

The sum of the full-time employees and the full-time equivalent of the part-time employees is the number used to determine whether a company is an applicable large employer.

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