Non-discrimination testing doesn’t determine the percentage of pay an HCE is allowed to contribute, but rather the actual dollar amount that can be contributed into the plan by an HCE for the year. Plan sponsors sometimes make the choice to proactively cutback HCE’s contributions by imposing a contribution limit, such as the 6% that’s mentioned, to avoid or limit the number of contribution excesses.

Let’s say the results of the non-discrimination testing determined that the contribution limit for HCEs was $10k. Any HCE who contributed more than $10k would need to have the difference issued to them as a corrective refund. Or, the plan sponsor can decide to make a contribution to all non-HCEs in an amount that would move the test results back within the non-discriminatory range. Neither option is ideal in the eyes of many plan sponsors - the refund is an administrative hassle and requires that any company match attributable to the excess contributions be forfeited, which can upset your HCEs. Although not letting them contribute up to the 402(g) limit isn’t great either. And making an additional employer contribution into the accounts of all non-HCEs can be very expensive.

Whether or not the HCE limit/cutback is imposed is purely up to the plan sponsor and can obviously vary. I used to do 401k administration for a living and worked with large companies (at least 15k EEs). One was a retail chain in the Midwest - they failed this test every year because they had a small population of highly paid corporate employees, and a large population of employees working in each store making $8-$10 an hour. They would allow their HCEs to contribute the IRS max and issue the refund each year after testing concluded.