University of Missouri Extension

Calculating employer size

Am I considered a small or large employer under the health care law?
The Affordable Care Act (ACA) imposes Employer Shared
Responsibility provisions on large employers — those that
employed 50 or more full-time employees, or a combination of
full-time and part-time employees that equals 50 or more, in
the prior calendar year.
Add up part-
If you think you might be a large employer, use this sheet to time employee Add full-time
Count full-time
find out for sure. It will help you add up the full-time and part- employees for hours for each employees and
month and FTEs for each
time employees you had last year to get a monthly average. each month
month
divide by 120
How do I count my average number of to get FTEs
And then...
employees?
Do this five-step calculation:
1. Count the number of full-time employees (including seasonal
employees) for each month in the prior calendar year. Full-
time employees are employees who worked 30 hours or
more per week or at least 130 hours per month.
Yearly total
2. Count the number of full-time equivalents (FTEs) for each Add up Divide by 12 number of
monthly totals to get monthly employees
month of the prior year. Include all employees (including to get yearly average number 49 or fewer =
seasonal) who were not full-time. Here’s how: total of employees small
50 or more =
A. Add up the number of hours of service for all large
employees who worked 120 hours or fewer in January,
then February, and so on through the year.
B. Divide the total hours of service from step A by 120
to get your FTEs for January, then February, and so on through the year.
3. Add together the full-time employees and FTEs for January, then February, and so on until you have totals for each month of
the year. This will show you any fluctuations in your employee numbers.
4. Add together all 12 monthly totals to get your yearly total.
5. Divide by 12 to get your monthly average number of employees.
Results:
• If your average monthly number of employees was 49 or fewer, you are considered a small employer for the current
calendar year. You are not subject to Employer Shared Responsibility requirements.
• If your average monthly number of employees was 50 or more, you are considered a large employer for the current
calendar year. You are subject to Employer Shared Responsibility requirements.
Seasonal exception — If you hire seasonally so that your workforce increases during certain times of the year, you might not
be considered a large employer if:
• The amount of time your workforce has 50 or more full-time employees and FTEs is 120 days (about 4 months) or fewer,
AND
• The employees in excess of 50 who were employed during the 120 days or fewer were seasonal workers.
Example 1 — Calculating employer size: Seasonal exception?
Brown Farms has 35 full-time employees for all months of the JAN 35 JUL 35
year. For 3 months during harvest and processing, they employ an FEB 35 AUG 35
additional 75 full-time seasonal workers. MAR 35 SEP 110
1. Count full-time employees = 35 each month except for seasonal APR 35 OCT 110
hiring = 110 in September, October and November. (See chart.) MAY 35 NOV 110
2. Count part-time employees to get FTEs = 0 JUN 35 DEC 35
3. Add together full-time and FTEs for each month to get Total for year 645
employees.
4. Add together employees for each month to get a count for the year. 35 employees for 9
months = 315; 110 employees for 3 months = 330. Yearly total is 315 + 330 = 645.
5. Divide yearly total by 12 months to get your monthly average. 645 ÷ 12 = 53 employees
Result: Although Brown Farms averages 53 employees per month, they are not a large
employer for ACA purposes because their seasonal workers were employed for less than 120
days. (If their seasonal workers had made their workforce greater than 50 for more than 120
days, Brown Farms would have been a large employer.)
Example 2 — Calculating employer size
Holland Electric Company has 35 full-time employees and 30 part- JAN 55 JUL 55
time employees, who each work 80 hours per month. FEB 55 AUG 55
1. Count full-time employees = 35 MAR 55 SEPT 55

2. Count part-time employees and how many hours they each work APR 55 OCT 55
per month, then divide by 120 to get FTEs. 30 part-time x 80 MAY 55 NOV 55
hours per month ÷ 120 = 20 FTEs JUN 55 DEC 55

3. Add together full-time and FTEs for each month to get employees. Total for year 660
35 full-time + 20 FTEs = 55
4. Add together employees for each month to get a yearly total. 55 employees each month for
12 months = 660 for the year
5. Divide yearly total by 12 months to get your monthly average. 660 ÷ 12 = 55 employees
Result: Holland Electric averages 55 employees, and they are a large employer for ACA
purposes.
Example 3 — Calculating employer size
Ozark Widget Co. has a range of 44 to 54 full-time employees Number of FT employees plus FTEs
during the year. Two part-time employees work 80 hours per
JAN 44+2=46 JUL 49+2=51
month and two work 60 hours per month.
FEB 50+2=52 AUG 54+2=56
1. Count full-time employees = (See chart.)
MAR 52+2=54 SEP 44+2=46
2. Count part-time employees to get FTEs = (2 part-time x 80
APR 49+2=51 OCT 52+2=54
hours per month) + (2 part-time × 60 hours per month) =
MAY 50+2=52 NOV 51+2=53
280 ÷ 120 = 2 FTEs
JUN 51+2=53 DEC 44+2=46
3. Add together full-time and FTEs for each month to get
Total for year 614
employees. (See chart.)
4. Add together employees for each month to get a yearly total. (See chart.) = 614
5. Divide yearly total by 12 months to get your monthly average. 614 ÷ 12 = 51 employees
Result: The company averages 51 employees per month, and they are a large employer for
ACA purposes. (Note: Without the 2 FTEs added to each month for the part-time employees,
Ozark Widget Co. would be a small employer. 590 ÷ 12 = 49 employees.)

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