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How do I calculate the number of full-time equivalent (FTE) employees?

Written by: PeopleKeep Team
November 23, 2020 at 8:24 AM

xThe Affordable Care Act's employer mandate (aka Employer Shared Responsibility Payments or the Play or Pay decision) requires "applicable large employers” (ALE) to offer health insurance to employees. The definition of an ALE is an organization that has 50 or more “full-time equivalent” (FTE) employees.

The post will help you calculate the number of FTEs to determine if you are an applicable large employer.

Calculating the number of FTE employees

For the purposes of determining whether your company is an applicable large employer, you must include all full-time employees plus the full-time equivalent of part-time employees.

A full-time employee is an employee who works, on average, at least 30 hours per week in a given month. So the first step is to count the number of employees who meet this requirement.

Next, factor in part-time employees. To calculate the full-time equivalent of part-time employees, add the number of hours worked by all part-time employees in a given month and divide the total by 120. This gives you the number of full-time equivalents in your part-time workforce.

Finally, add the number of full-time employees and the full-time equivalent of your part-time employees to get your total number.

Your company is not an applicable large employer if you employed less than 50 full-time employees on average during the previous calendar year, or if you employed more than 50 full-time employees for no more than 120 days during the previous calendar year (for example, you might have a seasonal workforce).

Worksheet: How to Calculate the Number of FTEs

Here is a worksheet outlining the above FTE calculations.

Learn more:

This post was originally published on July 7, 2014. It was last updated November 18, 2020.

Topics: Employer Mandate, FAQs, Glossary, Employer Funded Health Insurance

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