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Can California Require Corporations To Have Women Board Members?

By Catherine Hodder, Esq. on May 17, 2022 3:52 PM

On May 13, 2022, a Los Angeles judge struck down a 2019 California law requiring a certain number of women on corporate boards. Citing California's equal protection clause, the judge ruled that the "women on boards" law violated men's constitutional rights.

What Is the 'Women on Boards' Law?

The law, adopted in 2019, required publicly traded corporations with a "principal executive office" in California to have at least one female member on their boards of directors by December 31, 2019. By the end of 2021, corporate boards had to meet the following requirements:

  • Boards with four or fewer directors had to have at least two female members
  • Boards with five directors had to have three female members
  • Boards of six or more directors had to have three women

It is important to note that there was no limit to how many board members a corporation could have. The purpose of the law was to advance gender equity and inclusion on Californian corporate boards.

The law requires corporations to report their compliance or be fined $100,000 for the first violation to $300,000 for repeat violations. To date, California has not issued any penalties for violations.

In March 2021, the California secretary of state's office reported that out of 716 corporations impacted by this mandate, only half of those filed a report. Furthermore, only a little over half of those corporations filing a report met the law's requirements.

The law, has had an effect, however. Before the law, only 17% of board members in California were women. In September 2021, women comprised 30% of board seats in California.

'Women on Boards' Law Ruled Unconstitutional

Judicial Watch, a conservative legal group, sued to overturn the law. The group claimed California illegally used taxpayer funds to advance a law that violates the equal protection clause of the California constitution. In addition, they argued that promoting a quota for women on boards discriminated against men.

The state defended the law's constitutionality stating that it was important to reverse discrimination that culturally favored men. The state also noted that boards could increase membership to include as many male members as they wanted.

When then-Gov. Jerry Brown signed the "women on boards" law, however, even he acknowledged that a court could overturn the law.

To uphold the law's constitutionality, California had to prove that the law was narrowly tailored and intended to fix "specific, purposeful, intentional and unlawful discrimination," wrote Los Angeles Superior Court Judge Maureen Duffy-Lewis.

In declaring the law unconstitutional, she found that the law did not meet those requirements and violated the state constitution's equal protection clause.

What Is Equal Protection?

The California Constitution states that no one can "be deprived of life, liberty, or property without due process of law or denied equal protection of the laws." Equal protection is often used to prevent gender discrimination.

Furthermore, under California law, an employer cannot refuse to hire someone based on their "race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status."

In a few instances, gender discrimination may be legal if there is a bona fide occupational qualification. For example, a women-only correctional facility may hire a female corrections officer as a supervisor. Or a male clothing line may hire only male models to represent their brand.

What Happens Now?

It is not clear if the state will appeal the judge's ruling or if legislators will attempt to craft a new version of the law.

Ultimately, enforcing a gender-based quota for women on boards may not hold up to judicial scrutiny. A different California judge also recently tossed a similar law requiring board members from "underrepresented communities." Judicial Watch used the same arguments in suing to overturn that law as well.

However, public scrutiny is another matter. With the visibility of gender disparity, shareholders may demand more diversity and representation on corporate boards.

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