Requirements of the equal pay law bring legal risk to companies

The demands of the “equal pay law” between men and women, proposed by the government of Luiz Inácio Lula da Silva (PT) and approved by Congress, are bringing doubts and inconvenience to companies.

For experts heard by People’s Gazette, the impositions increase bureaucracy expenses, which are already among the highest in the world, and expose reputable companies to legal risks and damage to their reputation. Furthermore, they represent undue and even authoritarian interference by the State in labor relations (read more below, in the topic “Experts criticize paraphernalia and authoritarianism“).

Entities representing industry and commerce requested the Ministry of Labor and Employment (MTE) to postpone the deadline for the measures provided for in Ordinance No. 3,714, which regulates the law.

According to the regulations, companies with more than 100 employees must provide information about their internal equality policies through the Emprega Brasil portal by the 29th.

Based on the information and data sent monthly through the e-social system, the government will prepare a “salary transparency report” that must be widely disseminated on each organization’s website or institutional channels by March 31st. The periodic publication of the document aims to elucidate possible violations of salary equity.

If the employer fails to provide the information or disclose the report, it will be fined an amount equivalent to 3% of the payroll, limited to 100 minimum wages. If the government considers that there was a specific case of salary discrimination, the fine will be ten times the minimum wage, in accordance with article 461 of the Consolidation of Labor Laws (CLT). The value will be increased by 50% in case of recurrence. Furthermore, the law establishes compensation for moral damages to the injured employee.

Competition and labor aspects are a concern

The request to postpone the deadline for providing information was mediated by the National Data Protection Institute (INPD). The document is signed by the industry federations of Rio Grande do Sul, Santa Catarina and Paraná, in addition to the Rio Grande do Sul Commerce Federation and the Rio Grande do Sul Business Entities Federation. The argument is the need for more time for the companies can meet the requirements without facing legal uncertainty.

“We have had little discussion on the topic at the corporate level and the obligations have a very tight deadline. It is not clear what the MTE is aiming for, nor how the information will be made available and monitored. The fear is that disclosure could lead to litigation or other types of challenge for companies”, explains lawyer Rafael Reis, president of INPD.

According to him, the main points of concern concern competition and labor issues. The report will provide visibility into salary parameters and internal policies. “My competitor will have access to my company’s average salary, he will know which policies I have and which I don’t. It’s a delicate situation that we would need to study a little more to understand the consequences”, says Reis.

According to him, international studies demonstrate that transparency in salary averages results, in the long term, in a reduction in the amounts paid to workers.

In relation to the labor area, the lawyer believes, more specific criteria are needed. The law is based on the Brazilian Classification of Occupations (CBO), which cannot capture all the nuances between the positions of an organization.

“Imagine a situation where the transparency report identifies a salary difference between a man and a woman. For example, a legal director who earns less than a commercial director. It is a justifiable difference, since the legal area does not bring revenue to the company”, explains the lawyer.

“From the moment this becomes public, a bad climate within companies may arise, in addition to undue labor lawsuits. Companies need to understand the limits of this report, how far it goes, and that is not clear”, he assesses.

MTE tries to clarify doubts, but there are gaps

To resolve doubts regarding the transparency report, the MTE held a live broadcast on the internet with business representatives on the 7th.

According to Reis, the ministry’s representatives ensured compliance with the protection of employee data, a central concern of the INPD.

“The initial conversation with the ministry clarified that the report will only contain salary differences by percentage. Even so, there is a risk of exposing information in smaller companies, where there are few people in management and management positions. Higher salaries may be identified “, alert. “We still don’t know how MT will solve this.”

In the live broadcast, the MTE informed that Labor tax auditors will analyze existing salary differences and that companies will be able to provide additional data to justify any disparities highlighted in the transparency report.

However, a business representative who followed the broadcast and spoke to the People’s Gazette under the condition of anonymity, warns that the possibility of justification is later. In other words, the company will only be able to explain itself after publishing the report and imposing a fine.

According to him, the ministry representatives made it clear that any salary difference, no matter how small, will be classified as discrimination, subject to classification and fines.

The president of INPD highlights that no one has yet had access to the final report model that will be published by the government. “An impact study of these new measures was also not carried out. Hence the need to guarantee an adequate transition period, which allows for a broader public debate and the making of necessary adjustments”, he states.

Experts criticize paraphernalia and authoritarianism

In the assessment of experts consulted by the People’s Gazettethe requirements of the new law will greatly complicate the day-to-day lives of companies.

“It’s a paraphernalia, a very confusing situation that is being created. It will cause a lot of headaches for employers, employees and human resources professionals”, says José Pastore, professor of Labor Relations at the University of São Paulo (FEA-USP) and president of the Employment and Labor Relations Council of FecomercioSP.

“There are many details and filigrees that can make up salary differences and the potential for generating legal complaints is immense”, says Pastore.

According to Pastore, the 2017 labor reform, under the Michel Temer government, had already made progress in curbing wage inequality, establishing criteria to define what discrimination really is in article 461 of the CLT, which deals with the matter.

“It is necessary to assess whether employees have the same workload, whether they work in the same establishment, in the same position, whether they do the same thing and whether they have the same amount of time in the role”, he explains. “Now, what about a company that has published on its website that it offers different salaries for men and women, without the necessary distinctions?”, he asks.

Hélio Zylberstajn, professor at FEA-USP and coordinator of the Fipe Salary Meter, classifies the government’s initiative as authoritarian.

“It’s violence, very authoritarianism. The company will have to inform the government again of data it already has on e-social, fill out a form with internal information for the government to interpret whether or not discrimination exists. And then the company is forced to publish on its website a report drawn up by the ministry itself using CBO criteria, generic for many occupations. It’s a horrible thing, an immense interference in work relations”, he states.

Labor lawyer Eduardo Pastore also highlights the flaw in the methodology of using the CBO median to classify disparities and predicts an increase in judicialization. “The most worrying thing is the damage to reputation, with the virtual court of social networks. Inadequate disclosure can lead to retaliation and unfair cancellation of companies”, he warns.

Law was celebrated, but it could have the opposite effect

Law No. 14,611/2023, called the “equal pay law”, was forwarded to Congress by the Executive last year as part of the package of measures commemorating International Women’s Day, March 8.

Questioned by opposition parliamentarians, since equal pay between men and women is already provided for in the CLT, the law expanded its scope to include race and ethnicity, significantly increasing fines in case of proven pay discrimination. It also included compensation for moral damages and created transparency obligations for companies.

Deputies and senators approved the project in record time, in June 2023, to applause from the press, feminists and entities linked to the defense of minorities.

Despite agreeing with the purpose of curbing discrimination, the market has signaled, since approval, that the expected effects could be contrary due to fear of labor actions. The concern still exists. “The law ends up being complicated and can make it difficult to hire women”, assesses Zylberstajn.

Pastore highlights the opposite possibility. “I spoke to a hospital director who was very frightened by the new regulations that revealed the intention of only hiring women and dismissing men in nursing positions”, he says.

Not all pay inequality is the result of discrimination

The central point of the discussion, according to experts, concerns the fact that the majority of salary differences are not due to discrimination, but rather to the conditions of the labor market, which favors greater availability and flexibility of working hours.

“The market knows that women, due to their greater responsibilities with the home and children, end up having more restrictions. This is not discrimination. Companies pay more for those who can work odd hours”, says Pastore.

The thesis was proven by Claudia Goldin, a professor at Harvard University, who won the Nobel Prize in Economics in 2023 for her work on women in the job market. Goldin, who spent her academic life studying the subject, concluded that social and cultural factors underlie gender wage differences.

In a recent work, the Nobel laureate highlights the argument of visiting researcher at the University of Delaware Letícia Barbano, a specialist in gender equity and the relationship between motherhood and the job market.

“Generally, senior positions that earn more or are leadership positions require very long working hours, such as travel and meetings outside of working hours. And women, especially when they become mothers, have a hard time keeping up with these long working hours like men do,” wrote Goldin, citing Barbano.

According to Goldin, with motherhood, women, not always of their own free will, end up needing to dedicate less time to work. Breastfeeding and caring for the baby’s first months are exclusively the responsibility of women, who avoid long-time jobs.

To mitigate the differences, the economist proposes promoting a culture with more flexible working hours and less working time for men and women.

Zylberstajn argues that, instead of creating new impositions via laws, ordinances and decrees, the government could think about proposing and regulating parental leave, equal for men and women.

In José Pastore’s assessment, social and cultural issues must be isolated from discrimination. “Wage differences are, most of the time, the result of market laws. And there is no law of Parliament that can change a market law,” he says.