What does ''full-time equivalent employee'' (FTEE) mean?

Full-time equivalent employee means an employee who works 40 hours or more, on average, each week. The hours of employees who work less than 40 hours are calculated as proportions of a single full-time equivalent employee and aggregated.

How should a borrower calculate its number of full-time equivalent employees?

Borrowers seeking forgiveness must document their average number of FTE employees during the covered period (or the alternative payroll covered period) and their selected reference period. For purposes of this calculation, borrowers must divide the average number of hours paid for each employee per week by 40. An employee that works 40 hours a week is counted as 1 FTE, for example.
The FTE is capped at 1, so an employee who was paid 48 hours per week, for example, is considered to be an FTE employee of 1.0.
For employees who were paid for less than 40 hours per week, borrowers may choose to calculate the full-time equivalency in one of two ways:
First, the borrower may calculate the average number of hours a part-time employee was paid per week during the covered period. For example, if an employee was paid for 30 hours per week on average during the covered period, the employee could be considered to be an FTE employee of 0.75.
Second, for administrative convenience, for borrowers who do not maintain hours-worked data may elect to use a full-time equivalency of 0.5 for each part-time employee

Most of our staff doesn't work full-time. Some work as little as 3 hours per week. How would we calculate that?

For each employee you'll need to calculate their average weekly hours divided by 40 hours to determine their FTE equivalency. A 3 hour employee would be 0.075 and a 10-hour employee would be 0.25. Alternatively you may use 0.5 for everyone who works less than 40 hours. But remember that means that the person who work 30 hours would also only count as 0.5.

After I completed payroll, 2 PT staff resigned. I am now down 4 PT staff and 1 FT staff from my normal census. I know I have until 12/31 to replace them, but my gross payroll will definitely be lower without them. Can I increase the hourly rate of my currently rehired employees as a bonus or hazard pay since we started coming back into the building this week and are making moves to apply for a waiver to slowly begin reopening?

Yes, bonuses and hazard pay are both eligible payroll expenses under PPP. However, reducing salaries does not compensate for reducing your FTEs. You will need to replace your FTEs by 12/31. In order to qualify for FTE reduction exceptions, you must have documentation of efforts to replace, rehire or other efforts to reestablish FTE counts prior to the end of the covered period.

Once my PPP funds run out, can I make layoffs again?

Yes. If after the 8 or 24 weeks the PPP covered period, your business's financial situation has not improved, or the PPP funds have run out, you are able to put employees on furlough or lay them off if necessary.

Some of our staff were working during the past couple of months without pay based on a promise that our company was going to pay them as soon as the PPP loan came through? Can we use the PPP loan proceeds to back pay these employees?

Yes, for any unpaid payroll incurred after February 15, 2020. However, all employees are capped at $15,385 in cash compensation for 8-week covered period or $46,154 for the 24-week covered period.