Georgia Navigator Practice Exam

How is Full-time Equivalent (FTE) Employee calculated?

1. By dividing the number of employees by the number of hours worked

2. By calculating the total hours paid by the employer over the year divided by 2080

3. By averaging the total wages paid among all employees

4. By counting only those employees who work more than 35 hours a week

The correct answer is: By calculating the total hours paid by the employer over the year divided by 2080

The calculation of Full-time Equivalent (FTE) Employee is accurately represented by dividing the total hours paid by the employer over a year by 2080. This method is effective because it accounts for all hours worked by employees, regardless of whether they are full-time or part-time. In this context, a standard full-time work year is typically considered to be 2080 hours (40 hours per week multiplied by 52 weeks). By using this number, you can convert the total hours worked into a standard equivalent, allowing for a clear comparison between part-time and full-time work contributions. This approach ensures a consistent metric for assessing workforce size and productivity, which is critical for budgeting, labor planning, and understanding workforce needs. For example, if an organization pays a total of 10,400 hours over the year, dividing that by 2080 would yield 5 FTEs. This informs management of the equivalent full-time staffing levels based on actual hours worked, making it a valuable tool for making strategic decisions regarding staffing and resource allocation.