Is This California Law The Solution To Getting Women On Boards?

This new law makes more sense than endlessly talking about female participation on corporate boards but never doing anything concrete about it.

Nope, I am not going to say a peep about last week’s goings-on in the Senate Judiciary Committee. If my head didn’t explode last week, it probably will this week. I learned a valuable lesson early in my career (i.e., a long time ago): if you don’t have anything to contribute to the conversation (and I think what I would say has already been said a thousandfold), then STFU, which is exactly what I am doing.

As you know, I am very California-centric. This state, for all its faults (earthquakes and others) and foibles, is often a trailblazer, leading the way in starting conversations and changing viewpoints. And we’ve done it again. Governor Jerry Brown just signed a bill that is going to raise a lot of hackles, is probably unconstitutional as he admitted in his signing statement, but it’s kind of a “what the hell, let’s see what happens” attitude. Good for him and good for this state.  At least people will start talking about the issue.

What’s the bill that he signed? It’s legislation, effective January 1, 2019, that mandates that publicly traded companies based here in California (i.e., location of a principal office as set forth in the Form 10-K) must have female representation on their boards, one by the end of 2019, and up to three by 2021, depending on the number of board seats.

California is the first state to mandate this requirement. Right now, 25 percent of those companies to which the law will apply do not have any women on their boards. It will be interesting to see if any other states follow suit. Norway and France already mandate female participation on corporate boards.

Maybe even more California-based publicly traded corporations will get the hint and think that having women on their boards would be a good idea. One hundred percent compliance with the law? Wouldn’t that be nice? I’m not holding my breath, however. Blue is not my best color.

Just as the “good old boys’ network” is only now slowly being chipped away at in our profession (kind of like using an ice pick on an iceberg), corporate boards have long been a male bastion. Maybe there’s been a woman or two on boards in the last decade or so, but there hasn’t been a push by the C-level poo-bahs to make concerted efforts toward diversity. Female board representation is a little better now, but this legislative kick in the pants may be what’s needed.

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Granted, there’s no question that there are constitutional claims to be made, especially because the legislation only speaks of women and not of minorities, and who knows whether the law will pass muster. Lawsuits challenging it will probably be filed as soon as the law becomes effective January 1.

But I like the fact that there will now be discussion about the whole issue of women on corporate boards and why there aren’t most of us on them. And please don’t insult my intelligence that “a good woman is hard to find.” Phooey. And what’s more, that claims assumes facts not in evidence. There are superbly qualified women, not just in law but in finance, health care, business, technology, whatever and wherever, who could shine as corporate directors if only given the opportunity. As always, the issue is opportunity, not just on corporate boards, and finding those who will give a hand up and not a push down. Always a challenge.

A New York Times columnist says that this new California law may be a perfect example of “be careful what you will for,” aka “the law of unintended consequences.”  He raises some valid concerns about the efficacy of the law and whether it will have the desired impact, assuming that it passes constitutional muster. He looks at it as one step forward, but two back and thinks that investors, big and small, can use their influence to get corporate boards to diversify. (And I still believe in the tooth fairy.)

However, I think you have to start somewhere, and why not here with this law at this time? Sometime, timing is everything. Exhibit 1 for my theory goes back to 2004: then San Francisco mayor Gavin Newsom (now running for governor) led the charge for marriage equality when he ordered the San Francisco City Clerk to issue marriage licenses to same sex couples.

Ironically, at the same time that California is mandating female participation on California-based publicly traded companies, the number of women CEOs across the country is declining. Right now, fewer than five percent (not a typo) of the CEOs in the S&P 500 are women. That’s not the way it should be going.

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Would more women board members make a difference in CEO selection? As the article points out, the board chooses CEOs, and the more diversity on the board, the more likely the board is to select a female CEO. However, the article points out that women are hired for their experience while men are hired for their potential. (Sound of teeth gnashing.) Why not use the same standard or standards for both sexes? You tell me. However, that would require a whole new mindset, and we know how difficult change is and how well-entrenched interests will stubbornly fight against it.

Whether you think this legislation is a good idea or another one of California’s
“out there” creations, this new law makes more sense than endlessly talking about female participation on corporate boards but never doing anything concrete about it. Enough with the hand-wringing, the endless conversations, and reports that lead nowhere. But, of course, that never happens in our profession, does it?


old lady lawyer elderly woman grandmother grandma laptop computerJill Switzer has been an active member of the State Bar of California for more than 40 years. She remembers practicing law in a kinder, gentler time. She’s had a diverse legal career, including stints as a deputy district attorney, a solo practice, and several senior in-house gigs. She now mediates full-time, which gives her the opportunity to see dinosaurs, millennials, and those in-between interact — it’s not always civil. You can reach her by email at oldladylawyer@gmail.com.