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ObamaCare FAQ of the Month: What are "Full-Time Equivalent" Employees?

January 2014

By: Peter E. Hansen, Esq.

Many employers know that the ObamaCare "play or pay" penalties apply only to so-called large employers, but might not know what a large employer is. Although the penalties do not take effect until 2015, the 2014 calendar year will determine whether an employer is subject to the penalties - so, if you are not sure whether you are a "large employer," you must start tracking your full-time and full-time equivalent employees now.

Basically, a "large employer" is any organization that employed fifty or more full-time and/or "full-time equivalent" employees during the preceding calendar year. Identifying full-time employees is fairly straightforward; simply count the number of employees who worked thirty or more hours per week on average during the month. Identifying full-time equivalent employees, on the other hand, requires more work - you must determine the total number of hours worked by employees who are not full-time during the month, then divide that number by 120. That number is your full-time equivalent employees for the month. Essentially, "full-time equivalent" employees are all of your part-time employees combined.

Questions? Suggestion for a future ObamaCare FAQ of the Month? Please contact WS Attorney Peter E. Hansen at (262) 560-9696, or email pehansen@wesselssherman.com .