A Los Angeles judge has ruled that California’s landmark law requiring women on corporate boards is unconstitutional.
Superior Court Judge Maureen Duffy-Lewis said the law that would have required boards 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, claiming it was illegal to use taxpayer funds to enforce a law that violates the equal protection clause of the California Constitution by mandating a gender-based quota.
The law was on shaky ground from the get-go with a legislative analysis saying it could be difficult to defend and then-Gov. Jerry Brown saying he was signing it despite the potential for it to be overturned by a court. Brown said he signed the bill to send a message during the #MeToo era.
In the three years it has been on the books, it’s been credited with improving the standing 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 was put in place only after other measures failed. The state also said the law didn’t create a quota because boards could add seats for female directors without stripping men of their positions.
Although the law carried potential hefty penalties for failing to file an annual report or comply with the law, a chief in the secretary of state’s office acknowledged during the trial that it was toothless.
No fines have ever been levied and there was no intention to do so, Betsy Bogart testified. Further, a letter that surfaced during trial from former Secretary of State Alex Padilla warned Brown weeks before he signed the law that it was probably unenforceable.
“Any attempt by the secretary of state to collect or enforce the fine would likely exceed its authority,” Padilla wrote.
The law required publicly held companies headquartered in California to have one member who identifies as a woman 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 were required to have three women.
The Women on Boards law, also known by its bill number, SB826, called for penalties ranging from $100,000 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 board members.
Fewer than half the nearly 650 applicable corporations in the state reported last year that they had complied. More than half didn’t file the required disclosure statement, according to the most recent report.
Supporters of the law hailed it for achieving more gains for women. Other states followed California’s lead. Washington state passed a similar measure last year, and lawmakers in Massachusetts, New Jersey and Hawaii proposed similar bills. Illinois requires publicly traded companies to report the makeup of their boards.
Deputy Attorney General Ashante Norton said alternatives to a law mandating seats for women had been tried in California to no avail. In 2013, for example, the Legislature passed a resolution to get companies to add women to their boards, but few did.
Before California's law took effect, women held 17% of the seats on company boards in the state, based on the Russell 3000 Index of the largest companies in the U.S., according to the advocacy group 50/50 Women on Boards. As of September, the percentage of board seats held by women climbed to more than 30% in California, compared to 26% nationally.
Still, some 40% of the largest companies in California needed to add women to their boards to comply with the law, the group said.
