California’s unprecedented law requiring all public companies headquartered there to have at least one female board member by 2020 is drawing lawsuits, reports Axios' Courtenay Brown.
- Why it matters: Pressure to diversify corporate boards has historically come from shareholders and special interest groups. With California's law poised to take effect — and at least three states weighing similar legislation — critics are raising the question of government overreach.
The law sets a penalty of $100,000 in fines for public companies that don't have at least one woman on their board by the end of 2019.
- Opponents are hoping to block the law before it gets stricter: By 2021, companies with five-person boards will have to have at least two women, while boards of six or more will have to have three.
- Companies that refuse to comply more than once will be fined $300,000 per seat that should be filled by a woman.
The other side: A coalition led by the California Chamber of Commerce, said in a letter to lawmakers that by focusing "only on gender," the law "potentially elevates it as a priority over other aspects of diversity."
- In one of the ongoing lawsuits, the lead lawyer told the AP: "The law mandates exactly what the equal protection clause forbids — taking into account things like sex or race" in hiring.
The big picture: Most big companies subject to the law — like Google, Wells Fargo and Disney — have had women on their boards for years, prodded, in some cases, by backlash against all-male boardrooms.
- 70 of the 602 publicly traded companies headquartered in California were not in compliance as of July, according to research by Clemson University and the University of Arizona.
What’s next: Lawmakers in other states, including Massachusetts, New Jersey, and Washington, hope to follow California's lead.