If you are a business owner operating in California, it is essential to know how to calculate Full-Time-Equivalent (FTE) employees accurately. Why? Because this calculation determines whether you qualify as a small or large employer under the Patient Protection and Affordable Care Act and applicable California law. Here’s what you need to know.

What are FTE Employees?

FTE employees are not actual employees but a calculation that takes into account all the part-time and full-time workers who contributed to a company during the previous calendar year. If the employer is new and didn’t exist in the prior year, then the calculation includes all part-time and full-time employees who are reasonably expected to work in the current calendar year. It’s an interesting way to measure an organization’s workforce.

Calculating FTE Employees

To calculate FTE, you need to add up the total number of hours worked by all employees during the week and divide that number by the standard number of hours worked during a full-time week. This is usually 40 hours per week, but it can vary depending on the industry or company policy. The result is the number of FTE employees.

For example, suppose a company has four part-time employees who work 20 hours per week and four full-time employees who work 40 hours per week. In that case, the total number of hours worked in a week is:

4 part-time employees x 20 hours/week = 80 hours

4 full-time employees x 40 hours/week = 160 hours

Total hours worked = 80 + 160 = 240 hours

To calculate the FTE employees, you can divide the total hours worked by the standard number of hours worked by a full-time employee:

240 hours / 40 hours per week = 6 FTE employees

In this example, the company has six FTE employees, which includes both full-time and part-time employees.

Determining Your Eligibility

If the final figure exceeds 100, the employer is considered a large employer under California law. However, if the final figure is 100 or less, the employer is a small employer eligible for Covered California for Small Business, which started from Jan. 1, 2016.


Calculating Full-Time-Equivalent (FTE) Employees is crucial for businesses to determine their eligibility for various benefits, such as tax credits, health insurance, and retirement plans. As a business owner, you must understand how to calculate FTE employees accurately to comply with legal requirements and make informed decisions regarding hiring and benefits. It’s essential to get this calculation right because it can have a significant impact on your business’s success.

Need Help with Group Health Insurance

Skyline Benefit is an independent health insurance broker in Fullerton, CA that offers affordable and flexible group health insurance options.  Selecting the best group health insurance plans can be overwhelming; our mission is to simplify the process and help our clients every step of the way.

Schedule a consultation today. Call us at: (714) 888-5112

Get a Group health insurance quote