Judge rules California law requiring women to serve on corporate boards is unconstitutional

A Los Angeles judge has ruled that California’s landmark law requiring women to serve on corporate boards is unconstitutional.

Superior Court Judge Maureen Duffy-Lewis said the law that would have required boards of directors to have up to three female directors by this year violated the right to equal treatment. The ruling was dated Friday.

The conservative legal group Judicial Watch had challenged the law, saying it was illegal to use taxpayer funds to enforce a law that violates the California Constitution’s equal protection clause by requiring a quota based on gender.

The law was in unstable ground from the beginning with a legislative analysis that said it could be difficult to defend and the then governor. Jerry Brown said he would sign it despite the possibility of a court overturning it. Brown said he signed the bill to send a message during the #MeToo era.

In the three years it’s been on the books, it’s been accredited with improving the position of women in corporate boardrooms.

The state defended the law as constitutional, saying it was necessary to reverse a culture of discrimination that favored men, and it was implemented only after other measures failed. The state also said the law did not create a quota because boards could add female director positions without stripping men of their positions.

Although the law carried strong potential penalties for failing to file an annual report or failing to comply with the law, a head of the secretary of state’s office acknowledged during the trial that it was ineffective.

No fines have ever been imposed and there was no intention to, Betsy Bogart testified. In addition, a letter that surfaced during the trial of former Secretary of State Alex Padilla warned Brown weeks before he signed the law that it was likely unenforceable.

“Any attempt by the secretary of state to collect or enforce the fine would likely exceed his authority,” Padilla wrote.

The law required California-based public companies to have one member who identifies as female on their boards of directors by the end of 2019. By January 2022, boards with five directors were required to have two women, and boards with six or more members . they were obliged to have three wives.

The Women on Boards Act, also known by its bill number, SB826, called for penalties ranging from $100,000 in fines for failing to report board compositions to the California secretary of state’s office to $300,000 for multiple failures to have the required number of women on the board.

Fewer than half of the nearly 650 applicable corporations in the state reported last year that they had complied. More than half did not file the required disclosure statement, according to the most recent report.

Supporters of the law praised it for making more profits for women. Other states followed California’s lead. Washington state passed a similar measure last year, and lawmakers in Massachusetts, New Jersey and Hawaii have proposed similar bills. Illinois requires publicly traded companies to report the composition of their boards.

Assistant Attorney General Ashante Norton said alternatives to a law mandating women’s jobs had been tried in vain in California. In 2013, for example, the Legislature passed a resolution requiring companies to add women to their boards, but few did.

Before the California law went into effect, women held 17% of state company board seats, according to the Russell 3000 index of America’s largest companies, according to advocacy group 50 /50 Women on Boards. As of September, the percentage of board seats held by women increased to more than 30% in California, compared to 26% nationally.

Still, about 40% of California’s largest companies needed to add women to their boards to comply with the law, the group said.

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