health care reform

What is a Full-Time Equivalent Employee?

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In order to determine whether an employer is a large employer for purposes of the Affordable Care Act, both full-time and part-time employees are used to determine the 50 employee threshold.

Here is how each category of worker is used in the calculation of the total number of full-time equivalent employees an employer has for each month of the year:

  • Full-Time (Employees that work at least 30 hours per week in any month) - Counted as one full-time employee.
  • Part-Time – Calculated by taking the hours worked by all part-time employees in a month and dividing that amount by 120.
  • Seasonal – Not counted in the calculation for those working up to 120 days in a year.

For variable hour employees the IRS has issued Notice 2012-58 which gives employers guidance on how they may classify these employees through the end of 2014.

See IRS Notice 2011-36 for more details on the definition of a
full-time employee.

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