In other words, FTE allows companies to standardize headcount and measure workload capacity by converting part-time staff to a full-time basis. If you’re offering health coverage to remote workers, there may be some additional considerations. Calculating FTEs will also determine an employer’s duties under the shared responsibility provisions https://www.bookstime.com/ of the Affordable Care Act. Identifying which employees are FTEs is essential for a number of reasons ranging from workforce planning to adhere to employment laws under the Affordable Care Act. An explanation of how FTE is calculated and the various ways in which a business can use this metric when forecasting and budgeting.
Depending on the type of work that is required, management can decide the number of full-time employees that are needed for a particular project and assign employees to those positions accordingly. 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. The FTE is calculated by taking into account the number of hours worked in a full-time weekly schedule and the actual number of hours employees work. Based on the FTE value, some of your employees could be eligible for minimum or affordable healthcare insurance. Knowing this will help you stay compliant with state and federal laws.
How FTEs Work
One part-time employee who works ten hours per week and one part-time employee who works 25 hours per week. To calculate the total FTE, add the number of FTEs worked by full-time employees (1 FTE for each full-time worker) to the part-time FTE you calculated in step five. The WGEA also provides industry specific pay gaps, so employees and employers can see how their firm sits within the broader sector. And it’s worth noting that these are median earnings gaps, not average gaps. Using time tracking software, like Homebase, will allow you to run a historical report based on employee work history and status to gather the average hours worked using custom fields. In addition, Homebase provides small business employers with a range of scheduling options to ensure your staff hours are within the correct range.
Another 33 per cent, says KPMG, is due to care, family and workforce participation. That 14.5 per cent difference is based on the median female salary of $68,071 versus the median man’s $79,613. IRR calculator (internal rate of return) finds the IRR metric for all potential investments. As artificial intelligence technology continues to develop, the demand for workers with the ability to work alongside and manage AI systems will increase.
Helps employers track team workload
Actual hours worked per week is the exact number of hours an employee worked. However, you’d want to average those hours over a time period such as four months. This ensures that you’re not getting a skewed result based on a higher or lower number of hours worked in a week than typical. To determine fte meaning this amount, ask yourself, what do you expect a full-time employee to work in terms of hours per week? The answer should be between hours a week per employee (when considering full time). It is then important to note that some FTE calculations do involve a fair amount of assumptions.
- After all, the net costs of hiring additional part-time employees may, in fact, be lower than the more visible cost of overtime pay for existing staff, and FTE is used to uncover such findings.
- If your company’s gap sits between those ranges – say, it has a pay gap of 2 per cent, or -3 per cent, the WGEA considers the pay gap to be neutral.
- For instance, let’s say a full-time graphic designer working 40 hours per week makes $48,000 per year.
- A full-time equivalent employee refers to a combination of part-time employees that add up to one or more full-time employees.
- Under ACA, any employee that works at least 30 hours per week, or 130 on a monthly basis, is entitled to some form of healthcare.
- The PPP is part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.
This is particularly true for large organizations that employ a variety of full-time, part-time, and flexible staff. If an employer has a 40-hour workweek, a worker scheduled for 40 hours per week is 1.0 FTE. Three of them work full-time (40 hours per week respectively) and the rest work 10 and 5 hours in total. 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. An FTE salary is an employee salary converted into a full-time equivalent salary within a full year, regardless of whether the said employee holds a full-time or part-time position.
FTEs in the Workplace
Part-time and casual salaries have been converted into annualised full-time equivalent salaries. Jennifer Soper has 25+ years of writing and content design experience, working with small businesses and Fortune 100 companies. For over a decade, Jennifer worked as an HR generalist, providing expertise in accounting, payroll, and HR by implementing payroll and benefits best practices and creating onboarding and employee-relations documentation. If you’re concerned about staying compliant, consider software such as Homebase that will track your employee hours, provide reporting, and can also prepare your time sheets for payroll.