Determining median employee compensation is new territory for employers

Calculating total compensation for corporate CEOs is nothing new, since companies for years have reported information such as salaries, bonuses, equity awards and other forms of remuneration.

But adding rank-and-file employees to the calculation to determine median employee compensation is indeed something new, Eugene W. McDermott Jr., a partner in the Providence, R.I., office of Edwards Wildman Palmer L.L.P., said in an email.

Even though companies never have had to report compensation of rank-and-file employees under existing rules, “not all of these things need to be taken into account in first identifying the median employee,” said Mr. McDermott.

“So for example, it seems like a company could develop a reasonable method to identify the median that does not include pension benefits,” he said. “If that company then identifies two equally paid workers as being at the median, but one participates in a pension and the other does not, the "denominator' in the ratio could be very different depending on which employee is used, and the ratio could be very different.”