New California Law Putting More Women on Company Boards

california law


Under a new state legislation signed by Gov. Jerry Brown, publicly held California corporations must have at least one woman on their board. This California law will be enacted by the end of 2019. And by 2021, those companies with five members must have at least two women and companies with six members or more must have three women board members at the minimum.

In his signing letter, Brown wrote, “Given all the special privileges that corporations have enjoyed for so long, it’s high time corporate boards include the people who constitute more than half the ‘persons’ in America.”

If companies fail to comply with these new state regulations, they could be facing a $100,000 fine for their first violation and a $300,000 fine for a second violation. This California legislature is making history by being the first law in the United States to require a minimum for diversity on company boards.

State courts have been looking to evidence of legislative intent when making new laws for over one hundred years. So while this new bill is facing pushback, it also has immense support from both California citizens and people out of the state. According to a new survey, 95% of Californians polled agreed that corporations are still not taking enough action to add more female board directors. And 71% of respondents showed their support for the new California law. Outside of California, 98% of survey respondents said they not only support the bill, but that they would like to see similar laws in their own states.

Despite the oppositions from certain California companies, research has proven that companies perform better when they have at least one female director compared to those companies with all-male board members.

Unfortunately, the number of women on company boards in California hasn’t been rising. In fact, it’s only increased by 0.5% in the last five years, going up to 16% from 15.5% in 2013. With men holding all board seats on a quarter of publicly traded companies in the state, many females are in strong support of this new bill.

While there are currently no other state laws like this one in the U.S., quotas have been proven effective in other parts of the world. In France, there was an increase in women board members, going from 12% in 2010 to 43% in 2018 after a quota was implemented. So supporters of the new bill hope that this California law can be just as effective.