For the Nebraska Advantage Act, how many hours does a salaried employee count as when figuring full-time-equivalent employees?

Plain-English summary

The Nebraska Advantage Act counts jobs in terms of full-time-equivalent (FTE) employees, which is built from hours worked. That's straightforward for hourly workers — but how many "hours" does a salaried employee represent? This ruling supplies the rule.

The basic rule. A salaried employee whom the employer considers full-time is treated as having worked the number of hours the employer has established as the regular workweek for full-time hourly employees, for any period in which the full salary is paid.

Paid time off still counts. A salaried employee is treated as working a full workweek during vacation, compensatory time, or sick leave, as long as the full salary is paid for the period.

Extra hours only count if pay goes up. A salaried employee is considered to have worked more than the normal workweek only when the pay for the comparable period is proportionally increased because of the additional work. If pay isn't proportionally increased, only the regular hours count.

Partial pay means prorated hours. If a salaried employee receives only a portion of the normal salary for a period, the hours worked are counted in the same proportion to the regular workweek as the amount paid bears to the full salary.

When the workweek isn't 40 hours, the FTE count shifts. If the employer's regular full-time workweek for hourly employees is not 40 hours, the number of salaried FTEs differs from the number of salaried employees. The ruling's example: a 36-hour regular workweek means each salaried employee is treated as working 36 hours, which converts to nine-tenths (0.9) of a 40-hour equivalent employee.

What this means for you

Employers counting salaried staff for an Advantage Act project

Anchor each salaried employee's hours to your own established full-time hourly workweek, not an assumed 40 hours. If your standard week is under 40 hours, your salaried employees each count as less than a full FTE (e.g., 0.9 at a 36-hour standard) — which affects whether you hit your required employment levels.

Payroll administrators

Full salary for a period (including PTO) = a full workweek of hours. Prorate hours when only partial salary is paid, and add hours above the standard week only when pay was proportionally increased for genuine extra work.

Common questions

Q: How many hours does a salaried full-time employee count as?
A: The number of hours the employer has established as the regular workweek for full-time hourly employees, whenever the full salary is paid.

Q: Do vacation and sick leave weeks count?
A: Yes, a salaried employee is considered to have worked a full workweek during vacation, compensatory time, or sick leave if the full salary is paid.

Q: My standard workweek is 36 hours. Is each salaried employee one FTE?
A: No. Each is treated as working 36 hours, which is nine-tenths (0.9) of a 40-hour equivalent employee.

Citations and references

• This ruling interprets how salaried employees are converted to full-time-equivalent employees for the Nebraska Advantage Act employment computations. It does not quote a specific statutory section; the conversion tracks the employer's established regular full-time workweek relative to a 40-hour equivalent.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr290504_salaried_employees.pdf

Original ruling text

Revenue Ruling 29-05-4
Economic Development Tax Incentives
December 20, 2005
Economic Development Tax Incentives -- Salaried Employees Considered Full-time Employees. A
SALARIED EMPLOYEE WILL BE CONSIDERED TO HAVE WORKED THE NUMBER OF
HOURS THAT THE EMPLOYER HAS ESTABLISHED AS THE REGULAR WORKWEEK
FOR A FULL-TIME HOURLY EMPLOYEE.
Advice has been requested as to determining the number of hours to be used for a salaried employee
for the purposes of the Nebraska Advantage Act in calculating the number of full-time equivalent
employees.
A salaried employee who is considered a full-time employee by his or her employer will be
treated as having worked the number of hours established as the regular workweek for full-time
hourly employees for any time period for which the full amount of the salary is paid. A salaried
employee will be considered to have worked a full workweek during periods that include vacation,
compensatory time, or sick leave if the full salary is paid for the period.
A salaried employee will be considered to have worked more than the normal workweek of the
employer only when the amount paid for the comparable period is proportionally increased because
of the additional work performed. If the amount of the salary is not proportionally increased, then
only the regular number of hours will be included.
If the salaried employee only receives a portion of the normal salary for a particular time period,
then the number of hours worked will be in the same proportion to the regular workweek as the
amount paid is to the full salary.
When the employer does not use a forty hour workweek for determining full-time employment
for hourly employees, then the number of full-time equivalents for the salaried employees will be
different than the number of salaried employees.
For example, if the regular full-time workweek for hourly employees is thirty-six hours, then each
salaried employee will be considered to have worked thirty-six hours a week. When converted
to equivalent employees of forty hours a week, each salaried employee will be nine-tenths of an
equivalent employee.
APPROVED:

Mary Jane Egr
State Tax Commissioner
December 20, 2005

Nebraska Department of Revenue, PO Box 94818, Lincoln, Nebraska 68509-4818