How SBA counts employees (13 CFR 121.106)
How 13 CFR 121.106 counts employees, averages pay periods over 24 months, and why the rule does not change the construction receipts standards.
Some size standards are stated in employees rather than receipts. 13 CFR 121.106 explains how SBA counts employees for those standards.
Who is counted
Section 121.106(a) says SBA counts all individuals employed on a full-time, part-time, or other basis. That includes employees obtained from a temporary employee agency, a professional employee organization or a leasing concern. SBA considers the totality of the circumstances, including IRS criteria, in deciding whether someone is an employee. Volunteers, who receive no compensation including in-kind compensation, are not counted.
How the average is taken
Under 121.106(b)(1), the average number of employees is taken over each pay period in the preceding completed 24 calendar months. Part-time and temporary employees are counted the same as full-time employees (121.106(b)(2)). A concern that has not been in business for 24 months averages the pay periods it has been in business (121.106(b)(3)). Where a concern has affiliates, their average employees are added in (121.106(b)(4)).
Why this matters for construction
The size standards for NAICS 236, 237 and 238 in 13 CFR 121.201 are stated in annual receipts, in millions of dollars. The employee rule therefore does not change the construction figures this site publishes. It matters for NAICS codes whose standard is stated in employees, which this site does not cover.
What to check before relying on a count
Keep payroll records for each pay period in the 24-month window, and note any affiliates whose employees must be added. Those records, and the affiliation review described in the affiliation guide, are what a size determination looks at. This guide explains the rule. It does not give advice on your specific workforce.