Financial Glossary
Full-Time Employee (FTE)
A Full-Time Equivalent is a unit that standardizes labor hours to allow comparison across employees working different schedules. One FTE equals the hours a single full-time employee works in a defined period -- commonly 40 hours per week or 2,080 hours per year. Part-time employees and contractors are expressed as fractional FTEs by dividing their actual hours by the full-time benchmark. FTE counts are used in benefits eligibility thresholds, government reporting, workforce planning, payroll budgeting, and in calculating metrics such as revenue per FTE.
Problem & Application
A campground resort employs 4 full-time year-round staff and 12 seasonal workers averaging 25 hours per week over a 20-week season. Full-time FTEs: 4.0. Seasonal FTEs: 12 workers x 25 hours divided by 40 hours = 7.5 FTE equivalent for the season, or on an annualized basis 7.5 x (20 weeks divided by 52 weeks) = approximately 2.9 annualized FTEs. Total annualized FTE count is approximately 6.9. This calculation matters for employer-sponsored health benefit eligibility thresholds under federal law, for state workforce development grants that set minimum FTE requirements, and for benchmarking labor cost per FTE against comparable hospitality operations. Operators often undercount seasonal FTEs and miss eligibility thresholds or reporting obligations as a result.
In Short
FTEs represent a company's core workforce, and proper classification and management are essential for compliance and operational efficiency.