How are terminated employees calculated in month FTE calculations? If I fire an employee or they quit during but are on my payroll for the first two weeks of the month and I hire a replacement for them and they are on payroll for the last 2 weeks of the month, do I have to count that as 2 full time employees or one? Or since they both only worked under 120 hours for that month do I just add the hours together and divide by 120 and count them as an FTE part time employee vs a full time employee?


Answer

There are a number of measurement periods an employer can use and methods of accrediting hours that allow employers to deal with termination, new hires, and re-hires. This allows employers to accurately address full-time and FTE employees in a number of common and uncommon situations.

Each situation uses a different method, but in short you would choose a method that allows you to calculate the terminated employees hours and new hire employees hours as FTE instead of simply full-time. This would avoid you having to treat two employees who didn't work full-time over the month as full-time employees. This could most likely be done by showing neither worked a total of 130 hours in the month and thus actual hours are counted as full-time equivalent. Of course your options depend upon actual hours worked by these employees.

This guide is very helpful for digging into more options in plain english.

PS. It's 130 hours in a month to be full-time. 120 hours is the amount of hours an employee must work in a year for 30 hours a week or 130 hours a month to trigger full-time status.

Under the ACA, for the purposes of providing an employee with health benefits, full-time is defined as working an average of 30 hours a week or more or 130 hours a month. To be considered full-time, the employee must work more than 120 days in a year. Learn more from the IRS.

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