FTE (Full-Time Equivalent) Calculator

Headcount and workforce size are not the same number, and the gap matters most under the Affordable Care Act. Converting employee hours into Full-Time Equivalents gives you the figure that determines Applicable Large Employer (ALE) status: average at least 50 full-time employees, counting full-time equivalents, over one calendar year and you are an ALE for the next, subject to the employer shared responsibility rules and the payments that follow a misstep. An accurate FTE count is what stands between confident staffing plans and an expensive compliance surprise.

To build the total, start by counting your full-time employees and the hours they work, then fold in part-timers on an equivalent basis. For each part-time worker, divide their monthly hours by 120, the ACA's defined threshold for a full-time month. Add those fractional equivalents together and combine them with your full-time count to reach the overall FTE figure.

Two errors trip up employers most often. The first is tallying only full-time staff and writing off part-time hours as too small to matter; in aggregate they routinely move the needle. The second is forgetting seasonal workers, whose hours count during the months they are employed and can quietly carry you past the ALE line; the IRS sets them aside only if the workforce topped 50 for 120 days or fewer in the year and the employees above 50 in that stretch were seasonal workers. Count every month of the prior calendar year and average the 12 monthly totals, because that is the period the IRS uses to decide ALE status.