Federal Highly Compensated Employee Exemption

The Highly Compensated Employee (HCE) exemption applies to employees who perform a limited number of executive, administrative, or professional duties, but are so well compensated that they still qualify to be exempt as White Collar Employees.

To be properly classified as an exempt HCE an employee must meet all elements of this test:

1. Primary duty includes performing office or non-manual work; and
2. They customarily or regularly perform at least one of the exempt duties of an executive, administrative, or professional employee; and
3. They are compensated at least $100,000 annually*; and
4. They must be paid at least $455 per week on a salary basis, meaning they will make this amount every week regardless of how many hours they work or the quantity or quality of their work*

At the end of the year, if the employee has not been compensated at least $100,000, the employer may make up the difference in order to maintain the exemption. If the employer chooses not to pay the difference, they must calculate and payout all of the employee's overtime for the previous year.