A California law that requires all publicly traded companies to include at least one female on its board of directors by 2020 is provoking criticism among some business owners and legal experts.
State Sens. Hannah-Beth Jackson and Toni Atkins sponsored Senate Bill 826, which was signed into law by former Governor Jerry Brown last year.
The law imposes a $100,000 penalty for all companies that don’t comply with the law by the end of this year. In 2021, all companies with a five-person board must have at least two women. Boards with six or more members must have three.
Companies that repeatedly fail to comply could be hit with a $300,000 fine for every seat that is legally mandated to be held by a woman.
“With women comprising over half the population and making over 70% of purchasing decisions, their insight is critical to discussions and decisions that affect corporate culture, actions, and profitability,” said Jackson in a statement last year. “The time has come for California to bring gender diversity to our corporate boards.”
A report from KQED found that one quarter of the 445 publicly traded companies in the state don’t have any women on their boards.
“All of the big corporation boards … only have men, you don’t have any women at all,” Eva Garcia, the vice president of the National Association of Women Business Owners, told The Epoch Times.
In a statement released to The Epoch Times, Lynn Jurich, the co-founder and CEO of Sunrun, expressed her support for the new law.
“As one of the few female CEOs in the energy industry, I am proud to support legislation that helps establish California as a national leader in gender equality,” she wrote. “Ensuring equal opportunity for women in boardrooms is an essential step to make sure that women are paving the way for future generations.”
Thus far, two lawsuits have been filed in response to the law. Judicial Watch, a conservative, non-partisan educational foundation, filed the first lawsuit in August.
The second lawsuit was filed by a business investor represented by the Pacific Legal Foundation. Anastasia Boden, a senior attorney at the firm and the lead attorney in the case, views the law as legally problematic.
“This law is almost impossible to defend,” Boden told The Epoch Times. “It is a quota which is extremely disfavored in equal protection jurisprudence, and it is such a broad mandate it applies to every boardroom and every business across every industry in the entire state of California. I don’t think there can possibly be enough evidence of discrimination to show that this type of remedy is necessary.”
She referred to the law as an attempt to pursue “a pure numbers game” that might not stand up in court.
“We’re suing with one claim,” she said. “This law violates the Equal Protection Clause of the Fourteenth Amendment, [which] guarantees people equal dignity and equal protection. The law mandates exactly what the equal protection forbids, and that’s discrimination on the basis of sex.”
In Boden’s view, the law reduces individuals to membership in their groups “based on immutable characteristics,” thereby preventing them from flourishing as individuals.
“We await the government’s response,” she added. “The next step will be for the government to either answer our complaint or move to dismiss.”
A coalition spearheaded by the California Chamber of Commerce wrote an open letter to legislators in August 2018 declaring that, while they agree with the intent of the law, they disagree with the manner in which the law seeks to enforce diversity.
The letter went on to state that the law will likely only lead to costly fines and potential litigation, citing both the U.S. and California Constitutions, as well as the Civil Rights Act as grounds for their opposition.
