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Corporate gender law takes effect

Photo By: Jay Godwin

9-24-2019

William Santoro, Contributing Writer

A few months ago, California governor, Jerry Brown, signed multiple laws protecting and promoting women and they are finally beginning to take effect. Perhaps most notable of these aforementioned laws is SB 826.  SB 826 will require at least one female director to serve on all California based public corporation boards by the end of 2019. Furthermore, companies would then be required to fill the position of three female directors by the end of 2021. Companies who fail to abide by these laws can expect a first offense fine of $100,000 and subsequent violations of $300,000. Failures to report board members completely will also yield another $100,000 fine. Other countries, such as France and Norway already have similar government mandates that require women to be on boards. 

Governor Brown’s attempt to leave his mark on California before he left office due to his term limit has been met with stark criticism. Many detractors fear that the law will be a logistical nightmare to fully implement. Governor Jerry Brown had his concerns, stating “I don't minimize the potential flaws that indeed may prove fatal to its ultimate implementation … Nevertheless, recent events in Washington, D.C. - and beyond - make it crystal clear that many are not getting the message.” While the bill has been signed, it is still unclear as whether the feasibility exists for the logistics to be worked out. Other naysayers fear that the government is reaching too far by forcing companies to hire and employ three extra board directors. Jennifer Barrera, senior Vice President of the California Chamber of Commerce argued that prioritizing gender over other aspects of diversity may wreak havoc over their diversity goals for the state and would prefer if companies composed their boards internally rather than by government mandate.

Democratic senator of California, Hannah-Beth Jackson, disagrees with her opposition, as this law destroys, “one of the last bastions of total male domination.” Companies with female board members have had the tendency to perform slightly better on average than companies comprised by all male members by 3.5 percent on a compounded annual basis since 2005. As California companies currently stand, 75 percent of companies have female board directors already. Senator Jackson believes the remaining 25 percent of companies have not done enough to attempt to increase the number of women on their boards. Other supporters believe that companies will now be able to better serve the public by destroying this level of discrimination. The author of SB 826 affirms that having more women in power will help reduce and eliminate workplace sexual assault and harassment. 

California companies will just have to wait and see their results over their next few years to monitor the effects of SB 826 once eliminated. If the resolution is able to successfully launch in California, other states could very well start to implement similar laws or mandates in the near future.