California’s law mandates that by the end of 2019, public companies that have their executive base in California must have at least one woman on their boards. By 2021, those numbers must increase for companies depending on the size of their boards. The legislation was introduced shortly after the new year in 2018, just months after the #MeToo reckoning sparked a national debate on the lack of equality, protections and representation for women in the workplace. It was signed by then-Gov. Jerry Brown (D) that September.
California is the first U.S. state to pass such legislation, Barrons reported.
Under California’s law, OSI would be required to have at least one woman on its board by the end of 2019, and at least three by the end of 2021. OSI did not immediately return emails and phone calls requesting comment about the lawsuit.
But the lawsuit filed Wednesday in the U.S. District Court for the Eastern District of California claims that the state’s mandate is unconstitutional and in violation of the equal protection clause because it discriminates on the basis of sex, and that requiring Meland to consider gender when voting to add members to OSI’s board forces him to discriminate.
A spokesperson for California Secretary of State Alex Padilla, who is named as a defendant, declined to comment because the office had not yet received a copy of the lawsuit.
Women and minorities are underrepresented in American boardrooms, though they have been making gains in recent years. A 2018 report by Deloitte and the Alliance for Board Diversity found that women made up 25 percent of board seats at Fortune 100 companies, while minority women made up just shy of 6 percent. Among Fortune 500 companies, women held about 22.5 percent of board seats and minority women just 4.6 percent. The majority of board seats for both Fortune 100 and 500 companies were still held by men.
While minority and female representation had increased among Fortune 100 and 500 companies, “advancement is still slow,” the report states.
California is “just trying something different ... to create a new mechanism to see greater diversity on these boards,” said Linda Akutagawa, who serves as chair of the Alliance for Board Diversity as well as president and CEO of Leadership Education for Asian Pacifics. “There are highly qualified women and minorities available to take places on these corporate boards, that add great value. They have deep experience, I think if anything [California’s law] is enabling companies to widen their aperture to see the talent that exists out there."
But the individuals behind the new lawsuit say they believe these quotas will harm women more than help them. The complaint claims that “the law is not only deeply patronizing to women, it is also plainly unconstitutional."
Despite the lack of female board members, Meland “would argue that there’s no evidence of discrimination” on OSI’s board, said Anastasia Boden, who is representing him through PLF.
Boden said the intent of the lawsuit is ultimately to strike down California’s law, which she said constituted “discrimination aimed at helping women.” In addition, she argued that the law could have the unintended consequence of “creating this image that women can’t make it to the boardroom without government help, and that’s not true. ... Under quotas, people may question whether women are being hired based on their merit, or under a quota.”
Boden believed that companies were already working to increase diversity on their boards due to pressure from investors and the public, and should be allowed to continue.
The lawsuit’s claims echo some of the arguments made by the conservative-activist group Judicial Watch, which sued the state in August on behalf of California taxpayers and called the law “brazenly unconstitutional,” the Mercury News reported.
State Sen. Hannah-Beth Jackson (D), who sponsored the legislation, defended the law’s constitutionality Thursday.
“I certainly respect the constitutional right of anyone to challenge the law in our courts,” she said in a statement to The Post. “However, I strongly believe that this measure meets constitutional requirements and will be held up in court. Significant research has shown the importance of adding women to boards to improve profitability and add to the economic well-being of the state, as well the interest of the state to advance gender equality."
Despite a clear gender imbalance among the top levels of corporate America, businesses and lawmakers are still debating the best way to address the issue.
As of July 2019, each company in the S&P 500 has at least one woman on its board, according to an annual corporate directors survey by PricewaterhouseCoopers. Women held 24 percent of these board seats in 2018, an increase from 19 percent of seats in 2013. But though PwC found that corporate directors generally supported more diversity and believed it benefited their companies, the findings showed opposition to efforts to increase diversity through legislation. The survey found that 83 percent of directors don’t believe laws such as California’s will increase diversity on their boards. The study found that 54 percent of female directors agree with that sentiment.
Some European countries such as Norway, Belgium, France and Italy have implemented quotas on the number of women on corporate boards — and it’s worked.
Serena Fong, vice president at Catalyst, an organization that provides research and tools to help women advance in the workplace, said in these countries, “we have seen an increase in the representations of women on corporate boards.
“Is it the only way to get women on to boards? No,” she said, noting regulatory and voluntary methods could be used instead of legislative quotas. But “when it comes to down to the sheer numbers, yes, they are effective.”