What Is an FTE (Full-Time Equivalent)?

A full-time equivalent (FTE) measures employee work hours, combining part-time and full-time schedules into a standardized metric. Businesses use FTE calculations for staffing, budgeting, and compliance with regulations like the Affordable Care Act.

By Brad Nakase, Attorney

Email | Call (800) 484-4610

Have a quick question? We answered nearly 2000 FAQs.

Table of Contents

1. What is a full-time equivalent (FTE)?

2. How does FTE work?

3. Methods for determining FTE

4. Example of determining full-time equivalent

5. Affordable Care Act-compliant Full-Time Equivalent

6. FAQs about full-time equivalents

What is a full-time equivalent (FTE)?

What exactly does FTE mean? The number of full-time equivalent (FTE) workers is a measure of the sum of all employees’ hours worked, whether they are full-time or part-time. If you’re trying to figure out how to comply with the Affordable Care Act or get tax credits, this statistic can be useful for predicting how many workers you’ll need to hire. Depending on the purpose, many methods are employed to determine FTE. Having a grasp on how to calculate FTE is helpful for keeping track of staff hours or wages.

How does FTE work?

Just what does FTE stand for? A full-time equivalent (FTE) is the average number of hours that a full-time worker puts in for a company. In order to plan, predict, staff, and compute salaries, the idea is to keep track of “hours worked” instead of the total number of workers. If a company maintains a 40-hour work week as full-time, and four workers put in 10 hours each week, the total for all four of them is one full-time equivalent (FTE).

Classifications of workers and other fields benefit greatly from this uniformity. Project managers and business analysts, for instance, utilize FTE to calculate labor expenses and effort. They can figure out pay rates when they have a good idea of how many full-time workers will be required to complete the job. They can use this data to make a budget projection for the next year or for a particular project. The work-year equivalent, or WYE, is another name for FTE when used in yearly projections.

In order to standardize the pay and working hours of part-time employees, human resources (HR) departments utilize FTE. When compared to full-time employees, half-timers are 0.5 since they put in half the hours but earn half the pay.

Headcount analysis also makes use of FTE. Analysts working with budgets may use FTE to compare employee numbers to outputs or profits with ease.

Each department’s workload determines the allocation of personnel to them using FTE. Management and HR can determine the necessary number of FTEs based on project requirements, job descriptions, or any other employment requirement.

Methods for determining FTE

To figure out FTE for an annual count, complete these steps.

Keep track of all employees and their hours worked.

Get a complete rundown of all the workers who had W-2s sent to them at the end of the year. Do not include 1099 contractors. Subtract authorized leave time, including vacation and sick days.

Establish what amount of hours constitutes a full-time role

Typically, companies use the maximum permissible hours—40 per week—to construct full-time schedules. Here, a part-time worker is defined as an employee whose weekly hours are fewer than 40. A part-time schedule is one that does not meet the company’s definition of a full-time employment, which may be 30 hours per week.

Determine the annual hours performed

A year consists of 52 weeks. Add together all the hours in a week and multiply by 52.

Add up all the hours worked full-time.

Add up all the full-time hours that your full-time workers have put in.

Multiply all part-time hours

Collect all of the part-time hours that your part-time workers have worked.

Figure out the part-time FTE

If you know how many hours a full-time employee works each year (like you did in Step 3), then you can divide that number by the total number of hours worked by part-timers to get their FTE.

Determine your overall FTE

Your part-time FTE should be added to your full-time FTE. If you know how many hours a person works each week and how many are considered full-time, you can easily determine their FTE value. A person working 35 hours has 0.875 FTE if 40 hours is considered full time. A 30-hour worker has a 0.75 FTE.

Example of determining full-time equivalent

Here is a sample computation to help you better grasp the meaning and how it works with FTE.

Make a roster of all your workers and the hours they’ve put in

There are four people working for Company A. Two workers put in forty hours each week. One worker puts in thirty hours each week. One worker puts in twenty hours each week.

Ascertain the minimum amount of hours that constitute full-time employment

For this business, forty hours a week is full time.

Determine the annual hours worked

One full-time equivalent (FTE) employee works 2,080 hours per week (52 x 40).

An employee working 30 hours per week would put in 1,560 hours.

Employee with 20 hours per week: 52 x 20 = 1,040 hours.

Count up all of the hours worked

The total number of hours worked by two full-time workers (40 hours per week) is 4,160.

Total up all of your part-time hours

1,560 plus 1,040 equals 2,600 hours.

Figure out the part-time FTE

Next, take the total number of hours worked by part-time employees and divide it by the number of hours worked by one full-time equivalent (FTE) each year (found in step 3).

The result is 1.25 FTE, calculated by dividing 2,600 by 2,080.

Determine your overall FTE

Add the full-time and part-time FTEs together.

Two employees working full-time is 2.0 FTE.

The FTE for part-time work is 1.25.

2.0 plus 1.25 equals 3.25 FTE.

Here, we have four employees and a 3.25 FTE.

Affordable Care Act-compliant Full-Time Equivalent

Employers having 50 or more FTEs are required by the Affordable Care Act (ACA) to offer benefits that comply with the ACA. Figure out your FTE count to see if your employer must offer such perks.

“Full time” according to the ACA is 30 hours or more per week. No matter how your employer defines “full-time,” you are still required to use this definition. Therefore, according to the Affordable Care Act, a full-time equivalent (FTE) is equal to any worker who works thirty hours or more.

You are required to offer suitable health care for your employees if, according to the calculations given above, your calculation yields 50 FTE or more.

FAQs about full-time equivalents

Frequently asked questions (FAQs) regarding FTE are covered below:

1. What does 0.9 FTE mean?

A 0.9 FTE figure indicates the percentage of a full-time employee’s workload. In this case, 0.9 FTE would equate to 36 hours, as full time is 40 hours. If full-time employment were to be 30 hours per week at another company, a 0.9 FTE would equate to 27 hours.

2. When comparing FTE and headcount, what exactly are the differences?

When a business keeps track of its headcount, it includes all of its workers, whether they work part-time or full-time. Regardless of the amount of hours worked, each individual is considered “one” when using headcount. The amount of hours that are considered full-time is defined by the full-time equivalent (FTE) system. As an illustration, let’s say an organization considers 40 hours a week full time. In this case, two individuals who work 20 hours each week would be considered 1.0 FTE.

3. What does it mean for FTE to be 100%?

FTE 100% means a full-time employee or someone working the equivalent of a full-time job. While most businesses use 40 hours per week to denote full-time employment, some use different numbers. A 1.0 FTE value is another way to put it.

4. How is FTE translated into salary?

When comparing a part-time worker’s wage to that of a full-time worker, the FTE number becomes relevant. A full-time employee is the basis for determining the wage for this position. A part-time worker’s wage is partly based on the FTE. Someone working 20 hours per week, or 0.5 FTE value, would earn $50,000 if the wage is $100,000 for a full-time employee. A person may make $75,000 working 30 hours, which is equivalent to 0.75 FTE.

5. What does 30 hours mean in terms of FTE?

A full-time employee (FTE) with 30 hours of work is equivalent to 0.75 hours if your organization follows the conventional 40-hour workweek. To reach this number, we divide 30 hours by 40 hours, which gives us 0.75. To determine the FTE value, divide 30 by the number of hours that you use for full-time.

Have a quick question? We answered nearly 2000 FAQs.

See all blogs: Business | Corporate | Employment

Most recent blogs:

What Is a Pay Stub and Why It Matters for Employees and Employers

Pay stubs detail wages, deductions, and taxes, helping employees track earnings and employers comply with state payroll regulations. They support loan applications, reduce payroll disputes, and are required or regulated in many states across the U.S.

What Are the Proper Steps to Fire Someone in California?

Terminating an employee in California requires following legal guidelines, maintaining professionalism, and ensuring proper documentation. This guide outlines lawful termination reasons, key procedural steps, and best practices to reduce legal and financial risks.

How Long Does a Misdemeanor Stay on Your Record in California?

A misdemeanor conviction in California stays on public record indefinitely but may be eligible for expungement under specific conditions. Background checks typically show misdemeanor convictions for seven years, but expungement can remove them from most employment screenings.

How Do I Prepare a Script for Firing Someone?

Learn the professional steps for firing an employee, from preparing a script to handling emotional reactions. Understand the proper procedures, reasons, and communication techniques to ensure a smooth and respectful termination.

What Is Involved in a PAGA Lawsuit?

PAGA lawsuits allow employees to file claims for labor code violations on behalf of themselves and others in California. Employers can face significant penalties, prompting many to settle to avoid costly judgments.

What Are the Rules for 10-Minute Breaks?

California law mandates two paid 10-minute breaks and a 30-minute unpaid meal break for an eight-hour shift. Employers who fail to provide required breaks may face penalties, and employees can seek legal action for compensation.

Can I Work Six Hours Without a Lunch Break?

California law requires a 30-minute meal break for shifts over five hours, but employees can waive it if working exactly six hours. Employers must comply with strict labor laws, ensuring uninterrupted meal breaks and legal protections for workers.

What Can I Do If My Employer Didn’t Pay Me on Payday?

Employers in California must pay workers on time, or they may face penalties of up to 30 days' wages for delays. Employees can file wage claims, seek legal assistance, or report violations to the California Labor Commissioner's Office for unpaid wages.

What Qualifies as a Hostile Work Environment in California?

Employees in California facing severe or persistent harassment based on protected traits may have legal options under state and federal laws. Filing a complaint with the California Civil Rights Department or consulting an employment attorney can help protect workplace rights and seek compensation.

When Is a Doctor’s Note for Work Required in California?

California employers generally cannot demand a doctor's note for sick leave, but exceptions exist under specific laws and circumstances. Legal conflicts persist, and employers may require medical documentation for disability accommodations, FMLA leave, or other valid reasons.

What Does California Law Say About Final Paycheck Rules?

California law mandates that final paychecks be provided promptly, with termination pay due immediately and resignation pay within 72 hours. Employers must include all owed wages, expenses, and accrued benefits, with penalties for late or incomplete payments.

Can an Employer Deny a Doctor’s Note?

An employer may deny a doctor's note if the absence does not qualify for legal protections under disability or family leave laws. Employers must evaluate medical documentation, employee statements, and applicable laws before considering disciplinary action.

How Much Can You Sue an Employer for Misclassification?

An employer's misclassification tactics can deny you fair wages, benefits, and legal protections. You may be entitled to compensation, including back pay, retirement contributions, and potential punitive damages, by pursuing legal action.

How Serious Is an EEOC Complaint?

An EEOC complaint can lead to costly legal battles, reputational damage, and mandatory policy changes for businesses. Employers may face financial penalties, investigations, and compliance requirements, impacting operations and workforce morale.

Do You Have Sample Letters for Termination of a Contract?

A contract termination letter formally ends a business agreement while protecting interests. This guide outlines key steps, considerations, and sample letters.

What Is a WARN Notice in California?

The California WARN Act requires businesses with 75 or more employees to provide 60 days' notice before mass layoffs, plant closures, or relocations. Noncompliance can lead to fines, back pay, and healthcare costs, making adherence essential for legal and financial stability.

What Is FICA and How Does It Impact Payroll Taxes?

FICA is a payroll tax that funds Social Security and Medicare, requiring contributions from both employers and employees. Employers must withhold, match, and submit FICA taxes while following IRS guidelines on deposit schedules, wage bases, and additional Medicare tax requirements.

What Is At-Will Employment and How Does It Impact Employee Rights?

At-will employment allows employers and employees to end their working relationship at any time without cause, impacting job security and flexibility. While it provides businesses with staffing flexibility, employees face fewer legal protections and potential job instability.

Employers Should Exercise Caution When Terminating Employees After Disability Leave

Employers should exercise great caution when considering whether to terminate an employee who is on leave. Employers are cautioned not to automatically terminate employment solely because an employee has used or exhausted their disability leave entitlement.

What Is FUTA? 2025 Rates and How to Calculate FUTA Tax

The Federal Unemployment Tax Act (FUTA) imposes a payroll tax on businesses that have employees, collecting revenue that funds unemployment benefits.

What Is the Difference Between a 1099 Contractor and an Employee?

A 1099 contractor operates independently, covering their own taxes and expenses, while a W-2 employee receives benefits and employer tax contributions. Misclassifying workers can result in fines, making it essential to assess control, financial arrangement, and job nature before classification.

How Do Contractors Typically Get Paid? Payment Methods and Legal Guidelines

Contractors receive payments through direct deposits, checks, payroll services, or online transfers, following legal and tax regulations. Proper classification, documented agreements, and compliance with IRS reporting ensure smooth transactions and avoid penalties.

What Is the Definition of a Non-Exempt Employee?

Non-exempt employees are entitled to overtime pay and must earn at least the federal minimum wage under FLSA regulations. Unlike exempt workers, they are typically paid hourly and receive 1.5 times their wage for extra hours.

Can Union Representatives Be Present at Disciplinary Meetings?

Employees have the right to request a union representative during investigative interviews that may lead to disciplinary action. Employers must comply or face potential labor law violations under the National Labor Relations Act.