Combating Decades of Gender-Based Discrimination in the Workplace with Legislation
by Lavinia S. Osilesi
Striving for gender equality in the workplace is an all too new initiative in America’s history. In fact, many laws that have limited women’s employment opportunities were perpetuated by this nation’s highest Court. For example, the Supreme Court has previously upheld laws that placed limitations on the hours that women could work by making it illegal for women to work in restaurants at night and making it illegal for women to work more than 10 hours in a laundromat. This gender-based discrimination has had lasting effects on the placement of women in the workplace and specifically, in the upper echelons of companies.
When looking at corporate boards in California, women hold substantially less leadership positions than men. For example, one-fourth of California’s public companies in the Russell 3000 index do not have women on their board of directors. Among the 446 publicly traded companies in the Russell 3000 index that are headquartered in California, female directors only hold 566 seats, whereas male directors hold 3,089 seats—more than five times that of women.
California Senate Bill 826 Seeks to Increase the Efficiency of Corporations in California and Promote a Fair and Equitable Workplace for Individuals in California
Senator Hannah Beth Jackson (D-Santa Barbara) and Senate President Pro Tempore Toni Atkins (D-San Diego) authored California Senate Bill 826 (“SB 826”), which should increase the profitability and productivity of corporations in California while promoting a fair and equitable work environment that fosters opportunities for qualified candidates.
The bill requires more women directors on boards of publicly held corporations in California such that, by the end of 2019, each board of directors will be required to have a minimum of one female director. By 2021, the bill will require a minimum of two female directors if the corporation has five authorized directors or a minimum of three female directors if the corporation has six or more authorized directors.
SB 826 has already passed the California State Senate and is currently going through the California State Assembly. It has passed the Assembly Banking & Finance Committee and the Assembly Judiciary Committee but must pass the Assembly Appropriations Committee and an Assembly floor vote before presentation to the governor for signature.
Despite the bill’s support from the California Legislative Women’s Caucus and sponsorship by the National Association of Women Business Owners California, it has received some opposition because it may be perceived as unconstitutional.
Opponents may argue that SB 826’s specification of the amount of women on a corporate board is a quota and thus should be unconstitutional. A quota is a program in which a certain, fixed number or proportion of opportunities are reserved exclusively for certain minority groups. However, unlike a quota, SB 826 does not mandate a fixed number or percentage of seats that women must hold. SB 826 has built-in flexibility. For example, a board with five authorized directors may have more than two female directors. Likewise, where a board has six or more authorized directors, the board may have more than three female directors. A board is not required to have a specific number of female directors for every male director nor is it required to achieve a fixed number of female directors on the board or to force men off the board to create an opening for women; the corporation can expand the board and still meet the mandates of SB 826.
In reality, SB 826 complies with the California Constitution and the U.S. Constitution. Gender parity is statistically shown to make companies more profitable and productive and to promote a fair and equitable workplace. As such, SB 826, which aims to achieve gender parity on corporate boards, serves an important government objective.
Further, the bill is narrowly tailored to an important government objective because neither men nor women are prevented, discouraged, or disadvantaged when pursuing opportunities on corporate boards. Rather, SB 826 advances California’s interest in addressing the gap between women and men in leadership positions such that both genders have the opportunity to drive the profitability and productivity of corporations in California.
Opponents may also argue that SB 826 requires corporations to select less qualified women in place of more qualified men. However, SB 826 does not draw a line on the basis of gendered criteria or stigmatize a group on that basis. SB 826 does not advance less qualified or unqualified women into positions in place of a more qualified candidate; rather, it creates an opportunity for qualified women to enter director positions as boards expand.
By passing SB 826, the California Legislature would send the message that the effects of gender-based discrimination that women have faced in the workplace will not be tolerated. Further, the bill demonstrates the Legislature recognizes the strong role that women play in corporate environments and that women increase the profitability and productivity of corporations. Accordingly, if SB 826 becomes law, California, the fifth-largest economy in the world, would join Norway, Germany, Sweden, Iceland, Finland, and France and actively move toward a gender-equitable workplace.
Lavinia Osilesi is a rising 3L at Pepperdine Law School.