How to use this calculator
"FTE" means two different things in HR. Finance uses it to turn headcount into budgeted full-time positions, usually on a 40-hour week. The Affordable Care Act uses its own method to decide whether an employer has 50 or more full-time employees, including equivalents, and therefore must offer coverage or risk penalties. The two numbers can differ, and mixing them up causes real compliance problems.
This calculator shows both. If you are close to 50, read our employee benefits guide and look at ACA compliance software that tracks hours monthly.
- Enter the number of employees who average 30 or more hours a week.
- Enter the number of part-time employees and their average weekly hours.
- Enter your standard full-time week for the budget view, usually 40.
- Repeat for each month of last year and average the results for the ACA test.
How it's calculated
Budget FTEs = full-time employees + (part-time employees x average weekly hours / standard weekly hours)
ACA FTEs for a month = total monthly hours of part-time employees, counting no more than 120 hours for any one person, / 120
ACA count for a month = full-time employees (30 or more hours a week, or 130 hours a month) + ACA FTEs
An employer is an applicable large employer for a year if its average monthly count across the prior calendar year is 50 or more, rounded down.
Worked example
A restaurant group has 42 full-time employees and 20 part-time servers averaging 20 hours a week. On a 40-hour basis, that's 52 budget FTEs.
For the ACA, each part-timer works about 86.7 hours a month. Twenty of them add up to 1,733 hours, or 14.4 FTEs. The ACA count is 56. If that holds as a yearly average, the group is an applicable large employer and must offer affordable minimum essential coverage to full-time employees or risk employer shared responsibility payments.
Rules to know
Under the ACA, a full-time employee averages at least 30 hours a week or 130 hours a month. Employers with 50 or more full-time employees, including FTEs, on average in the prior year are applicable large employers. Related companies under common ownership are combined. A seasonal worker exception can apply if the employer exceeded 50 for 120 days or fewer and the excess was seasonal workers.
ALEs must file Forms 1094-C and 1095-C each year. Variable-hour employees are often tracked with the look-back measurement method. The IRS guidance on applicable large employers is the primary source to confirm details.
This is general information for US employers, not legal or tax advice. Rates and rules change and vary by state and city, so confirm current figures with the agency or a qualified advisor.
Common mistakes
- Using the 40-hour budget FTE number for the ACA test.
- Counting more than 120 hours a month for any one part-time employee.
- Forgetting to combine related companies under common control.
- Checking only one month instead of the prior-year average.
Email templates that go with this
Once you have the number, these templates help you explain it to employees, candidates, or managers.
Where to go from here
A calculator answers one question. The right process and software keep the numbers right every pay period.
Frequently asked questions
How do you calculate FTE?
Is 30 hours a week full time?
Do seasonal workers count toward ALE status?
What happens if we become an ALE?
Written by the HRTally Research Team
Our guides are written and reviewed by people with hands-on US HR, payroll, and HR technology experience. Legal and tax facts are checked against primary sources, such as the Department of Labor, IRS, EEOC, and USCIS, and linked at the end of each guide. Vendors never review or pay for our editorial content.