A Non-Highly Compensated Employee (NHCE) is someone at a company who doesn’t meet the IRS definition of a higher-paid or high-ranking employee. This usually means they earn a more typical salary and don’t own a significant share of the business. In workplace retirement plans like 401ks, NHCEs are an important part of making sure the plan benefits everyone fairly—not just the owners or top earners. Employers use this classification during IRS testing to help confirm that contributions and benefits are distributed equitably across all income levels.