How to calculate Full-time Equivalents (FTEs):
The number of an employer’s FTEs is determined by dividing:
- The total hours for which you (the employer) pay wages to all employees during the year, up to 2080 per employee, by
- 2,080. The result, if not a whole number, is then rounded to the next lowest whole number. So, 17.80 employees would be 17 FTEs.
The IRS provides this example:
For the 2010 tax year, an employer pays 5 employees wages for 2,080 hours each, 3 employees wages for 1,040 hours each, and 1 employee wages for 2,300 hours.
The employer’s FTEs would be calculated as follows:
- Total hours not exceeding 2,080 per employee is the sum of:
a. 10,400 hours for the 5 employees paid for 2,080 hours each (5 x 2,080)
b. 3,120 hours for the 3 employees paid for 1,040 hours each (3 x 1,040)
c. 2,080 hours for the 1 employee paid for 2,300 hours (lesser of 2,300 and 2,080)
These add up to 15,600 hours
- FTEs: 7 (15,600 divided by 2,080 = 7.5, rounded to the next lowest whole number)