“Q: How are full-time and full-time-equivalent employees calculated?
A: A large employer potentially subject to the employer mandate penalty is an employer with more than fifty full-time-equivalent employees during the preceding calendar year.
Additionally, an employer who is part of a group of employers treated as a single employer under Code Section 414 (b), (c), (m), or (o) (including employees of a controlled group of corporations, employees of partnerships, proprietorships, etc., which are under common control, and employees of an affiliated service group) is treated as a single employer.[1] When a mandate penalty applies, it is to be paid ratably by members of the group.[2] For employers not in existence throughout the preceding calendar year, the determination of large employer is based on the average number of employees a firm is reasonably expected to employ on business days in the current calendar year.[3] Any reference to an employer includes a reference to any predecessor of that employer.[4]
The statutes use the term “full-time employee” in the definition of large employer, but then expand on the definition to include both full- and part-time workers.[5] Full-time employees are those working thirty or more hours per week.[6] The number of full-time employees excludes any full-time seasonal employees[7] who work for less than 120 days during the year.[8] The hours worked by part-time employees (i.e., those working less than 30 hours per week) are included in the calculation of a large employer, on a monthly basis, by taking their total number of monthly hours worked divided by 120.[9] In addition, an employer will not be considered a large employer if its number of full-time-equivalent employees exceeded 50 for 120 days or less or the employees in excess of 50 employed during the 120-day period were seasonal workers.[10]
Example: A firm has 35 full-time employees who work 30 or more hours per week. In addition, the firm has 20 part-time employees who all work 24 hours per week (96 hours per month). These part-time employees’ hours would be treated as equivalent to 16 full-time employees, based on the following calculation:
20 employees x 96 hours = 1920
1920 / 120 = 16″