Opinion of the Court
fixed salary”—one that does not vary with the precise amount of time he works. Ibid. The second element is the “salary level” test: It asks whether that preset salary exceeds a specified amount. Ibid. And the third is the “duties” test, which focuses on the nature of the employee’s job responsibilities. Ibid. When all three criteria are met, the employee (because considered a bona fide executive) is excluded from the FLSA’s protections.
Now, though, add a layer of complexity to that description: The Secretary has implemented the bona fide executive standard through two separate and slightly different rules, one applying to lower-income employees and the other to higher-income ones. The so-called “general rule” pertains to employees making less than $100,000 in “total annual compensation,” including not only salary but also commissions, bonuses, and the like. 29 CFR §§541.100, 541.601(a), (b)(1).[1] That rule considers employees to be executives when they are “[c]ompensated on a salary basis” (salary-basis test); “at a rate of not less than $455 per week” (salary-level test); and carry out three listed responsibilities—managing the enterprise, directing other employees, and exercising power to hire and fire (duties test). §541.100(a). A different rule—the one applicable here—addresses employees making at least $100,000 per year (again, including all forms of pay), who are labeled “highly compensated employees.” §541.601. That rule—usually known as the HCE rule—amends only the duties test, while restating the other two. In the HCE rule, the duties test becomes easier to satisfy: An employee must “regularly perform[]” just one (not all) of the three responsibilities listed in the general rule. §541.601(a); see 69 Fed. Reg. 22174 (2004) (explaining that the HCE rule uses a “more flexible
- ↑ All citations to the Secretary’s regulations refer to the 2015 version, which applied during the period in dispute. New regulations went into effect in 2020, making some changes but retaining the salary-basis test.
