Requiring women on corporate boards: Is CA judge right to overturn law?
- On May 17, 2022, Superior Court Judge Maureen Duffy-Lewis ruled that the California law requiring women on corporate boards was unconstitutional saying it violated equal rights.
- The Women on Boards law (SB826) required California companies to have one woman on their board of directors by 2019, and two to three women by the end of 2021. Penalties ranged from $100,000 to $300,00.
- A March 2022 Report via Diversity on Boards found that there were 716 publicly held corporations noting a California principal executive on their 2021 SEC 10 K filing, but only 186 “reported compliance” with the law’s requirements.
- According to a 2021 News Gallup poll, 53% of Americans were satisfied with the treatment of women; more men (61%) than women (44%) believed this to be true in society.
A Los Angeles Superior Court judge has correctly ruled that California's law requiring a specified number of women on corporate boards is unconstitutional. The law would have required corporate boards to have up to three women directors. Anyone with even a modicum of understanding of what equal protection under the law means could have seen the complete predictability of this law being ruled unconstitutional. This is yet more government-mandated meddling to achieve 'gender equity.'
Women can and should be on corporate boards if qualified, but the government has no idea—and no business decreeing—what that number should be. How did the lawmakers determine that 'up to three' women was the correct number? Why not 50% of a corporate board? It makes the standard arbitrary, and arbitrary rules bring society closer to governmental tyranny. These rules should be left up to the individual corporation itself, its sitting board of directors, and shareholders; the government has no place dictating over these details.
Forcing private-sector corporations to meet government stipulated gender numbers on boards is clearly unconstitutional. As the judge ruled, it violates the equal protection clause of the California Constitution by mandating a gender-based quota. The state claimed the law did not create a quota because boards were free to add sets for female directors so that no male director would lose their positions. Yet, having a fixed minimum or maximum number of something is the very definition of a quota.
This decision comes on the heels of another judge overturning yet another California government bean-counting law—one that mandated corporations add members from certain racial, ethnic, or LGBT groups. Elected officials across the nation, not just California, would be better off heeding the constitution before passing laws that so obviously violate it.
The Los Angeles ruling that California's landmark law requiring women on corporate boards as unconstitutional will set back women's rights in the corporate world. The law was originally enacted to reduce the gender gap in the corporate world. American women comprise about 50% of the entry-level workforce but somehow constitute less than 20% of leadership positions, despite having adequate qualifications and experience. Lack of ability and ambition has nothing to do with this scarcity. In most cases, the corporate world is male-dominated, a likely reason behind their continued promotion inside business to elite positions.
In the three short years this particular California law has been enacted, it has been credited with the improvement of women's standing in the corporate world. The law was necessary to reverse a culture of gender discrimination that primarily favored males. California only put the law in place after other measures had failed. The one benefit of the law was that it didn't set a maximum quota for boards, allowing leadership to easily add more seats for female members without demoting or stripping males of their position in the corporate world.
Even though the law stated large monetary penalties for companies that failed to comply with equal gender representation in the corporate world, the law was, in actuality, toothless. There was never any intention to punish companies, and not a single fine was issued for the lack of compliance. The California law was widely acclaimed for achieving more gains for women, and similar laws have already been passed in several other states. After the California law was passed, women's representation in the corporate world increased from 17% to 32%. This is a great gain for women that many hope won't diminish due to the repealing of this law.