Brazil: Brazilian Courts Issue Injunctions On Gender Pay Parity Law

Brazilian Courts have already ruled¹ on the controversial Brazil's Gender Pay Parity Law (Law No. 14.611 of 2023 – "Equal Pay Act")—regulated by Decree No. 11.795 of 2023 and Ordinance No. 3.714 of 2023. The Equal Pay act entered into force in February 2024.

In brief, the Equal Pay Act established two obligations for private legal entities with more than 100 employees:

(i) Enter information on the federal government's "Emprega Brasil" portal regarding the companies' practices regarding the equal pay of men and women, and how these companies attempt to curb inequality on the grounds of gender, race, ethnicity, national origin, or age. This data will be cross-referenced by the Ministry of Labor and Employment ("MLE") with the larger "eSocial" database in order to issue a report on salary transparency and remuneration criteria (a "Report"); and, subsequently,

(ii) Publish the Report issued by the MLE.

With regard to the Brazilian General Data Protection Law (Law No. 13,709 of 2018 - "LGPD"), the Equal Pay Act established that the LGPD should always be taken into account while fulfilling its obligations. The Equal Pay Act also requires that Reports disclose only anonymized data. However, it is likely that, in some cases, the Report will end up disclosing data that could indirectly identify a natural person, and therefore anonymization will not be guaranteed.

The risk of having salary range—and possibly race and gender—exposed, makes compliance with the Equal Pay Act difficult for certain companies. For this reason, some companies have already taken legal action to prevent the enforcement of this law, given the potentially severe penalties for violating the LGPD—the Report could expose sensitive and highly confidential data, such as salary ranges, of a vulnerable category of data subjects (e.g., employees).

Notably, the ANPD recently released its guide on data anonymization for public consultation—in other words, ANPD is attentive to whether anonymization is effective or not, and has even indicated in this draft guide a series of governance measures related to the anonymization of personal data.

There is a chance that the publication of the Report will only provide aggregated and generic data which does not identify natural persons—this is generally expected for companies with a large number of employees where in each salary, race and gender range there will be a significant number of employees. On the other hand, for smaller companies with fewer employees, the publication of the Report may result in a significant risk of exposing non-anonymized personal data.

The courts considered the risk of violating the LGPD and the Brazilian Federal Constitution while granting the injunctions aimed to prevent enforcement of the Equal Pay Act.

The Federal Court of Rio de Janeiro and the Civil Court of São Paulo granted emergency injunctions so the companies are not required to provide the information on the "Emprega Brasil" portal, nor are they required to publish the Report on their websites and/or social media. The courts ruled that the regulating ordinance and decree surpassed the limits of the Equal Pay Act because of all the information they required, and also in view of the mandatory publication of the Report. Both courts agreed with the plaintiffs that the publication of the Report is not grounded on the existing Brazilian framework.

The ruling issued by the Federal Court of Rio de Janeiro also pointed out that the publication of the data could end up violating the LGPD.

We are monitoring further decisions on the matter which will have a direct impact on companies subject to the Equal Pay Act.

Footnote

1. Preliminary Injunction No. 5011649-62.2024.4.02.5101, pending before the 26th Federal Court of the Judicial Section of Rio de Janeiro, and Preliminary Injunction No. 5004530-33.2024.4.03.6100, pending before the 26th Federal Civil Court of São Paulo.

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