To determine the FTE (Full Time Equivalent) you must count FT and PT employees. Full Time Employees are those working 30 hours+/week.* The number of full-time employees excludes those full-time seasonal employees who work for less than 120 days during the year.4 The hours worked by part-time employees (i.e., those working less than 30 hours per week) are included in the calculation of a large employer, on a monthly basis, by taking their total number of monthly hours worked divided by 120.
For example, a firm has 35 full-time employees (30+ hours). In addition, the firm has 20 part time employees who all work 24 hours per week (96 hours per month). These part-time employees’ hours would be treated as equivalent to 16 full-time employees, based on the following calculation:
20 employees x 96 hours / 120 = 1920 / 120 = 16
Thus, in this example, the firm would be considered a “large employer,” based on a total full-time equivalent count of 51—that is, 35 full-time employees plus 16 full-time equivalents based on part-time hours.
This blog is not intended to represent legal advise and one should consult with a tax and/or legal expert.
* IRC 4980H(c)(4)
Disclaimer: This blog is not intended to represent legal advise and one should consult with a tax and/or legal expert.