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Highly Compensated Test under the Fair Labor Standards Act (FLSA)

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An employee must meet the following criteria to meet the highly compensated test exemption:

  • total annual compensation is at least $100,000;
  • is paid at least $455 per week on a salary or fee basis;
  • performs office or non-manual work; and
  • customarily and regularly performs any one or more of the exempt duties identified in the standard tests for the executive, administrative or professional exemptions.

Total annual compensation does not include credit for board lodging or other facilities, payments for medical or life insurance, and contributions to retirement plans or other fringe benefits. Tasks or work performed “customarily and regularly” include work normally and recurrently performed every workweek. If a highly compensated “white collar” employee customarily and regularly performs one or more exempt duties, detailed analysis of all the job duties performed is not necessary. For example, an employee may qualify as a highly compensated executive employee if the employee customarily and regularly directs the work of two or more other employees, even though the employee does not meet all of the other requirements in the standard test for exemption as an executive.