Highly Compensated Employee Definition 2024. The irs defines a highly compensated, or “key,” employee according to the following. First, the scope of entities, including companies, and workers covered under the bill.

Owned more than 5% of the interest in the business at any time during the year or the. Highly compensated employees (hces) are employees who earn more than the irs maximum allowable compensation for a 401 (k) of $155,000.