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Full-Time Equivalent Employee (FTE) Calculation

Before beginning your full-time equivalent (FTE) calculation, you must determine the headcount or number of FTEs you had during your reference period. The actual loan forgiveness amount you receive may be less depending on whether your average weekly number of FTE employees during the Covered Period was less than during your chosen reference period.

fte calculation

You can select a reference period of:

  • 2/15/2019 – 6/30/2019
  • 1/1/2020 – 2/29/2020
    or
  • For seasonal employers, either of the two preceding periods or a 12-week period between 5/1/2019 and 9/15/2019

This number will become the denominator in the FTE reduction quotient. There are two FTE calculation methods to choose from to compute the numerator in the FTE reduction quotient.

Important: Make sure to review the FTE reduction exemptions to see if your business qualifies.

FTE Calculation Method 1

For each employee, during the Covered or Alternate Covered Period:

Take the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0

Example:

Employee A works an average of 30 hours per week

    • 30/40=0.75, rounded up to the nearest whole digit=0.8 FTE

Employee B works an average of 35 hours per week

    • 35/40=0.875, rounded up to the nearest whole digit=0.9 FTE

Employee C works an average of 40 hours per week

    • 40/40=1 FTE

This brings your total FTEs to 2.7.

Method 2 (AKA Simplified Method)

To use this FTE calculation method, assign 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours.

Example:

Employee A works an average of 30 hours per week=0.5 FTE

Employee B works an average of 35 hours per week=0.5 FTE

Employee C works an average of 40 hours per week-1 FTE

This brings your total FTEs to 2.0.

Once you have performed the two calculations, you will want to choose the higher of the two numbers as the numerator in your FTE reduction quotient.

So as an example if the number of FTEs that you had during the reference period that would be in your denominator was 4 than your FTE reduction quotient would be 2.7/4.0 or 67.5%.  This means that 67.5% of your Forgivable Costs would be allowed instead of 100% due to the reduction in your headcount during the covered period.

Contact Us for Help With Your FTE Calculation

If you need assistance filling out your PPP loan forgiveness application form, would like us to review your application, or have any other questions or concerns, we’re here to help. Please email info@hoffmancpas.com or call 443-320-4101.

This entry was posted on Thursday, November 19th, 2020 at 1:27 pm. Both comments and pings are currently closed.