New California Mandate: Add Women to the Board

October 4, 2018 |

On Sunday, California Gov. Jerry Brown signed a bill requiring publicly held companies based in California to have at least one woman on their board by the end of 2019. By 2021, boards with five members must have at least two women, and boards with six members or more must have at least three women.  Companies that don’t comply will be looking at a $100,000 fine for a first violation and $300,000 for a second violation.

The law will impact a number of California companies.  The percentage of women on corporate boards in California was 16 percent this year, a number that has barely moved from 2013 when it was 15.5 percent.

Although California’s law was opposed by business groups including the California Chamber of Commerce, it does have support from Californians.  Additionally, research shows that companies with at least one female director perform better than companies with all-male boards.  In fact, there is a growing body of research to suggest that gender-diverse boards benefit both women in general, but also the companies’ financial success.

For those outside California, stay tuned. Although California’s law is breaking new ground here in the U.S., diversity quotas for boards are required in a number of European countries; so this is not a new concept. Equal pay, sex discrimination, and sexual harassment have lawmakers’ attention.  Other states may follow California’s lead.

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