California Requires Gender Diversity on Corporate Boards

The state of California has just passed legislation requiring that California corporations include female board members amidst their board leadership teams, following in the footsteps of Norway and Germany.  Governor Jerry Brown signed the California statute yesterday, Sunday, September 30th, 2018, marking the first time that a state in the United States is requiring gender diversity amongst its corporate board members.

CNN Money reports that California now requires “publicly traded firms in the state to place at least one woman on their board of directors by the end of 2019 — or face a penalty.  It also requires companies iwth five directors to add two women by the end of 2021, and companies iwht six or more directors to add at least three more women by the end of the same year.  It’s the first such law on the books in the United States, though similar measures are common in European countries.”

The Corporate Justice Blog has long advocated for greater board diversity within corporate leadership in United States corporations.  Additionally, proponents of this legislation argue that the U.S. has waited too long to bring the weight of the law to bear on long-lasting discrimination against women in the corporate leadership arena.  Further, supporters point out that European nations have established gender diversity quotas that has lead to greater performance and profitability for such firms for years.  Critics argue, of course, that setting quotas will lead to “unqualified” female board members.  Opponents further argue that setting quotas might act as a discrimination against male candidates and might chill male board member interest.  These age-old critiques hark back to tired arguments made in the wake of 1960s affirmative action passage and turn of the century women’s suffrage opponents.  To date, of the Fortune 500, only 24 are led by female CEOs (4.8%).

hat tip to Janelle Cline, 2L University of Arkansas at Little Rock William H. Bowen School of Law