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California Governor Signs Bill Requiring Corporate Boards to Include Women

California Gov. Jerry Brown

California Gov. Jerry Brown Shutterstock

 

Connecting state and local government leaders

Although Jerry Brown recognizes the legal concerns that have been raised about S.B. 826, “it’s high time corporate boards include the people who constitute more than half the persons in America.”

California Gov. Jerry Brown signed legislation on Sunday that would require publicly traded companies with principal executive offices based in the Golden State have women sit on their corporate boards, something that business groups and others have questioned the legality of.

Companies not in compliance with S.B. 826, sponsored by state Sen. Hannah-Beth Jackson of Santa Barbara, would face a $100,000 fine for the first violation.

Brown wrote in a signing message for S.B. 826: “There have been numerous objections to this bill and serious legal concerns have been raised. I don’t minimize the potential flaws that may indeed prove fatal to its ultimate representation. Nevertheless, recent events in Washington, D.C.—and beyond—make it crystal clear that many are not getting the message.”

Additionally, the governor wrote that “it’s high time corporate boards include the people who constitute more than half the persons in America.”

By the close of the 2019 calendar year, corporate boards subject to the new requirements would need to have at least one woman. Then, according to S.B. 826’s legislative counsel’s digest:

No later than the close of the 2021 calendar year, the bill would increase that required minimum number to 2 female directors if the corporation has 5 directors or to 3 female directors if the corporation has 6 or more directors. The bill would require, on or before specified dates, the Secretary of State to publish various reports on its Internet Web site documenting, among other things, the number of corporations in compliance with these provisions. The bill would also authorize the Secretary of State to impose fines for violations of the bill, as specified, and would provide that moneys from these fines are to be available, upon appropriation, to offset the cost of administering the bill.

The new law could be vulnerable to a court challenge, Jessica Levinson of Loyola Law School told the Los Angeles Times. “I’m not at all convinced it would pass legal muster,” she 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.”

Michael Grass is Executive Editor of Government Executive’s Route Fifty and is based in Seattle.  

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