California governor signs bill requiring women on corporate boards by end of 2019

California governor signs bill requiring women on corporate boards by end of 2019
California Gov. Jerry Brown (D) of California signed into law a bill that requires corporate boards of directors to include women by the end of 2019. (Justin Sullivan/Getty Images)

California Gov. Jerry Brown (D) signed into law a bill that will require publicly held corporations to include at least one woman on its board of directors. The law is the first of its kind in the U.S., according to the Los Angeles Times.

On Sunday, Brown signed SB 826, which forces publicly held companies to have at least one woman on its board by the end of next year. Boards with five members must have at least two women on the board and those with six or more members will be required to fill three seats with women by the end of July 2021.

“Given all the special privileges that corporations have enjoyed for so long, it’s high time corporate boards include the people who constitute more than half the persons in America,” Brown wrote in a letter attached to the bill.

Corporations found in violation of the law would face a fine of $100,000 for the first offense. Additional offenses would cost $300,000 per violation.

There are 377 California-based corporations on the Russell 3000 stock index of large firms that may be affected by the law, according to the report.

Who proposed the bill?

State Sen. Hannah-Beth Jackson (D) and Senate leader Toni Atkins (D) proposed the bill in January citing women make up more than half of the state’s population, but only 15 percent of the state’s public corporations have a woman on their board.

“We are tired of being nice. We’re tired of being polite. We are going to require this because it’s going to benefit the economy. It’s going to benefit each of these companies,” Jackson said in an earlier speech. “It’s time that we burst that man-cave and put women in the boardrooms.”

What do critics say?

State Sen. Joel Anderson (R) voted against the bill because he believes it undermines women’s abilities.

“I can’t support a bill that underestimates the power and strength of women,” Anderson told the Times. “To say that they can’t find their way onto a board without our help undermines all their hard work.”

Lucy Dunn, the president and CEO of the Orange County Business Council, said the bill was an insult to businesswomen.

“This legislation is, to me, insulting,” Dunn wrote in a statement to the newspaper. “Rather than celebrate the competitive advantage women bring to positions of leadership in a company, it relegates them to placeholder status.”

The California Chamber of Commerce also disagreed with the law, according to KQED-TV. The organization argued that corporations should be allowed to choose its board members without government interference. It said the law will make it more difficult to achieve diversity in other aspects, including race.

“It creates a challenge for a board on achieving broader diversity goals,” Jennifer Barrera, senior vice president for policy at the chamber, told KQED.

What else did Brown say?

The governor noted in his signing message that there were numerous objections and serious legal concerns had been raised about the bill.

“I don’t minimize the potential flaws that indeed may prove fatal to its implementation,” Brown wrote. “Nevertheless, recent events in Washington, D.C. — and beyond — make it crystal clear that many are not getting the message.”

The message appeared to be pointed at the sexual assault accusations against Supreme Court nominee Brett Kavanaugh. A copy of the letter was sent to the Senate Judiciary Committee.

Anything else?

Experts have questioned the legality of the mandate.

Jessica Levinson, a clinical professor of law at Loyola Law School in Los Angeles, told the Times there’s a chance that the law could be challenged in court.

“I’m not at all convinced it would pass legal muster,” Levinson said. “It’s a clear gender preference in that you are saying you need to single out women and get them on boards. The question is can you make that preference and will it hurt men?”

Similar laws are already in place in some European countries.

Germany requires that women make up 30 percent of corporate boards of directors. France and Norway have mandated that 40 percent of board seats be filled by women.