Full-time equivalent (FTE)
A full-time equivalent converts part-time hours into a count of notional full-time employees, the unit several laws use to decide whether a mandate applies to you.
FTE counts decide legal thresholds, and different laws count differently. For the ACA’s employer mandate, part-time hours are totaled and divided by 120 per month, then added to full-time headcount to determine applicable large employer status at 50. COBRA applies at 20 or more employees on more than half of business days in the prior year, counting part-timers fractionally. State mandates set their own lines, and some count plain headcount rather than FTEs.
Joining a PEO does not change your counts. These thresholds are measured at the client employer level using common-law employees, so a PEO cannot make a 60-FTE company exempt from the ACA employer mandate, and pooling with other clients does not push a 15-person company over or under a state threshold. What a PEO can do is run the measurement and the resulting compliance work. Ask which counts the PEO tracks for you, which forms it files under whose name, and what it needs from you about workers it does not pay, because owners, temps from an agency, and offshore contractors all complicate the arithmetic.