Tag Archives: FTE

FTEs – Something about Obamacare that I understand, and I don’t think anyone’s going to like.

FTEs. I deal with them everyday, all day. They are the heart of my job. Not many people know what they are, but get ready, you’re going to be hearing a lot about them.

In my job I deal with people and insuring that the right number of people are working at the right times to get the job done. But, in fact, people are messy and inconvenient and don’t fit into neat boxes without complaining. They like to eat, they like to take breaks, they like to call out, come in late, and leave early. Because of that we don’t talk about needing 15 people, we talk about needing 15 FTEs – Full Time Equivalents. It may take 18, 20, or more “people” to make my 15 FTEs. Think of an FTE as a perfect employee. They never eat, are never late, and never do any of those other crazy things that people do.

So how does this apply to Obamacare you ask? Simple.

You’ve probably read the stories about employers planning to limit individual hours to a level that will keep them under the 30 hour per week cap that triggers Obamacare penalties. Of course that means they will have to hire more people to offer the same level of service or to accomplish the same amount of work.

“See, Mr./Ms. Bureaucrat, I don’t have 50 full-time employees, I only have 30 people working full-time and 40 working part-time.”

“Not so fast, evil rich person,” says Mr./Ms. Bureaucrat, “We’re on to your little game.”

An applicable large employer with respect to a calendar year is defined in section 4980H(c)(2) as an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year. For purposes of determining whether an employer is an applicable large employer, full-time equivalent employees (FTEs), which are statutorily determined based on the hours of service of employees who are not full-time employees, are taken into account.

So, in our little example above, if the part-time workers were all limited to 20 hours/week the government is going to add up all those 20s and declare that you really have 30 full timers and 20 FTEs. Congratulations, you are still Obamahosed.

Businesses are going to try to get creative in their attempts to avoid the beast, but the beast is not going to be denied. I fully expect that every attempt to avoid, or even dampen the effects of Obamacare (ie remain profitable) is going to be adjudicated and/or regulated.

The short version, this is not a great time to be a business owner. It’s an even worse time to be an employee, even if it takes you and a friend to make one FTE.