California's law to get women into boardrooms is a step toward gender parity, but is it enough?
As older white men in Congress continue to dominate headlines and exert authority at the federal level, some states are endeavoring to bring more women into positions of power. On Sunday, California Gov. Jerry Brown signed a bill into law mandating that every publicly traded company based in the state include women on its boards of directors. While praising the intent of the bill, legal scholars, business analysists, and even Brown himself raised concerns that the legislation would do more harm than good in creating more gender equality in the business world.
“There have been numerous objections to this bill and serious legal concerns have been raised,” wrote Brown in the letter announcing he was signing the bill. “Nevertheless, recent events in Washington, D.C. — and beyond — make it crystal clear that many are not getting the message.”
Under the legislation, Senate Bill 826, California has become the first state to establish a quota for gender representation on corporate boards. Every publicly traded business based in the state is required to have at least one woman on its board of directors by 2019, and at least two or three women by 2021, depending on the size of the board. Companies that fail to comply will be fined $100,000 in the first instance and $300,000 for the second and every subsequent violation.
When the bill was passed by the state Legislature in August, co-author State Sen. Hannah-Beth Jackson, D-Santa Barbara, told the floor that enough was enough. “We are not going to ask any more,” she said. “It’s time that we burst that man cave and put women in the boardrooms.”
Gender imparity on American corporate boards is no small matter. At the 3,000 largest U.S. publicly traded companies, women hold only 16 percent of all available seats. And according to the nonprofit CALmatters, one quarter of the 445 publicly traded companies based in the state only have men on their boards.
But not everyone agrees a quota is the most effective way to bring women into senior leadership positions. In its analysis, the state Legislature raised concerns that the legislation may be unconstitutional. There also appears to be some confusion about whether the mandate would apply to businesses headquartered in the state, but incorporated elsewhere, since companies are governed by the laws of the state in which they are chartered.
Others say the law will simply be ineffective. “It would, at most, increase the number of women directors at the Fortune 500 by a grand total of one,” Joseph A. Grundfest, a Stanford University professor who has long advocated for increasing women’s representation on boards, told The New York Times. Apple is the only “major company” that will be affected the law, according to Grundfest. Opponents of the bill have also pointed to research indicating that women selected for corporate boards as a result of the law may be tokenized or perceived by senior leadership as less qualified.
Several European countries have used quotas to increase gender parity on corporate boards, to some success. In Norway, companies are required to dedicate at least 40 percent of board seats to women. Still, women’s advocates point out that the law does little to address the systemic inequalities that lead to underrepresentation in the first place, or to ensure that women of color and other minorities get an equal seat at the table. While quotas can help address gender inequity, ultimately, they are “not enough to see real change,” Wendy Smith, Professor of Management at the Lerner College of Business, University of Delaware, told the online journal Directors & Boards.
“This California law is a good start, but will only be effective if it’s also surrounded by other laws, such as term limits [and] other commitments to have more women and minorities on boards, and other changes, such as cultural shifts in how we understand women's leadership.”
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