In Gender ‘Neutral’ California, Why Mandate More Women on Corporate Boards?

What both bills will likely cause is for male minorities to lose board seats to white women.

In 2018, the California Legislature passed a bill to require large corporations with base operations in California to put more female directors on their boards. Democrat Senators Hannah Beth Jackson’s and Toni Atkins’ gender quota bill is illegal, unconstitutional, and most definitely a precursor of negative outcomes, as recent history shows.

Gov. Jerry Brown signed Senate Bill 826 despite legal warnings that forcing publicly traded companies based in the state, and with operations located in other states, to have at least one woman on their boards by the end of 2019 and, on boards of five or more directors, and two or three women by the end of 2021 was unconstitutional.

Companies found violating the law face fines set at $100,000 for a first violation, $300,000 for a second or subsequent violation, and $100,000 for failure to timely file board member information with the Secretary Of State.

Ironically, Brown practically invited legal challenges in a signing memo saying, “There have been numerous objections to this bill and serious legal concerns have been raised.”

The prophet Jerry Brown was right.

Judicial Watch filed a lawsuit this week on behalf of three California taxpayers stating that spending taxpayer money enforcing the law is illegal under the California constitution.

Judicial Watch reports:

Judicial Watch announced today that it filed a lawsuit in Los Angeles County Superior Court on behalf of three California taxpayers to prevent the State from implementing Senate Bill 826.  The 2018 law requires publicly-held corporations headquartered in California to have at least one director “who self-identifies her gender as a woman” on their boards by December 31, 2019 (Robin Crest et al. v. Alex Padilla (No.19ST-CV-27561)).Up to three such persons are required by December 31, 2021, depending on the size of the board. The lawsuit alleges that the mandate is an unconstitutional gender-based quota.

In its complaint, Judicial Watch argues:

SB 826 is illegal under the California Constitution. The legislation’s quota system for female representation on corporate boards employs express gender classifications. As a result, SB 826 is immediately suspect and presumptively invalid and triggers strict scrutiny review.

Ironically, 04/23/18- Senate Judiciary Committee analysis produced eight pages of existing affirmative action law already benefitting women in the California workplace. Also ironic is how many bills Sen. Atkins and her Democrat Caucus members have passed attempting to blur the differences between women and men.

Sen. Toni Atkins is the author of a gender neutrality bill allowing Californians to change the gender on the California drivers license and birth certificate, and created a third gender marker on state-issued identification documents for people who identify as nonbinary or intersex.

If gender is “neutral,” why mandate more women on boards?

Another Gender Bill

Despite the 2018 unconstitutional bill and legal challenge, another such bill is making its way through the Legislature also mandating females on local boards and commissions.

AB 931 by Assemblywoman Tasha Boerner Horvath (D-Encinitas), requires that, by 2030, all large California cities must have women serving in at least 50 percent of their appointed, non-salaried local board and commission seats overall, and at least a specified numbers of seats approaching 50 percent on each individual appointed, non-salaried board and commission.

“As a husband and the father of a daughter,  I am all for access and opportunity, but this bill is just nuts,” a colleague told me.

The Assembly Local Government analysis clearly points out that this bill was a mess when it was introduced, because achieving 50 percent of a 5 or 7 person board is mathematically challenging.  Later committees tried to help the author address the basic math problem.

AB 931 obtained 58 votes in the Assembly, entirely along party lines.

Senate Governance and Finance analysis said this:

How would this work? Many local boards and commissions have odd numbers of members. AB 931 requires local boards and commissions with five or more members to have at least 50% women membership. However, the only way this is possible for a five-member board is to have three women members, or 60% of board membership. Many boards and commissions also require appointments based on other conditions, such as where a person lives or what particular qualifications they have. Given these competing priorities, some cities may face challenges complying with a minimum requirement over 50%. To clarify the bill’s requirements, the Committee may wish to consider amending the bill to require each odd-numbered board and commission to have one female member less than the majority.

This will create chaos at the local government level as evidenced by the opposition: the California State Association of Counties, Rural County Representatives of California, and Urban Counties of California. The bill’s support comes from the California Commission on the Status of Women and Girls.

Europe Has Been There, Done That, And It Failed

“More than a decade ago, countries in Europe began to take measures to increase the gender diversity of their corporate boards,” Harvard Business Review reported. “Norway was the first to adopt a quota for female board members (40%) in 2004. Other nations followed suit – adopting either mandatory quotas (Germany, France, Belgium, Iceland, Italy) or voluntary goals (Austria, Finland, the Netherlands, Spain, Sweden, the UK), with goals for female representation ranging from 25% to 40%.”

HBR interviews found that both men and women directors said quotas lead to less qualified directors.

The irony is that these “highly-developed” countries that have also implemented corporate gender quotas have failed to produce the desired results. Jackson and Atkins look to Norway to emulate. However, The number of public limited companies in Norway dropped from 452 in 2008 to only 257 in 2013. The number of board seats dropped from 2,366 in 2008 to 1,423 in 2013. So now, there are fewer seats for women to fill, The Federalist reported.

Time Magazine found that Spain (22 percent), Germany (14 percent), and Switzerland (13 percent) have some of the lowest proportions of women in senior management roles in the world, despite their own domestic policies addressing this issue.

These bills are desperately looking for a cause. Women are not blocked from boards now, as board trends clearly show. “Investment funds like BlackRock and Vanguard already push for board diversity on companies in their portfolios.

What both bills will likely cause is for male minorities to lose seats to white women. Norway has shown us this result.