California became the first state in the nation Sunday to pass a law demanding women have a seat on the boards of publicly traded companies. The law applies to companies with headquarters in California but could pave the way for other West Coast states with tech hubs that struggle with gender diversity.
The new law requires any public corporation in California to have at least one woman on its board by the end of the year. By 2021, companies with five or more directors will be required to have two or three women on the board.
The current federal political climate influenced California Gov. Jerry Brown’s decision to sign the bill into law, according to a letter he published over the weekend. Brown sent a copy of the letter to the U.S. Senate Judiciary Committee, which voted to advance Brett Kavanaugh’s Supreme Court nomination despite sexual assault allegations, according to The New York Times.
“Recent events in Washington, D.C. — and beyond — make it crystal clear that many are not getting the message,” Brown said.
Just 22.2 percent of all Fortune 500 board seats were held by women in 2017, though that number is on the rise. But despite some progress, the statistics for women in the workplace are not heartening, particularly in male-dominated industries like tech.
Female startup founders received just 2.2 percent of venture capital funding in 2017. Women still earn less than men in similar roles; one study showed the Seattle region is among the worst for gender pay gaps, with working women making 78.6 cents for every dollar male counterparts earn. However, research shows that companies with women in leadership roles have much smaller gender pay gaps.
In March, Washington state updated its gender pay law for the first time since 1943. The law forbids employers from instituting policies that don’t allow workers to discuss their salaries with one another. It also requires employers to provide the same career advancement opportunities to all employees in comparable positions, regardless of gender.
Washington’s progressive lawmakers and booming tech industry make it a likely candidate to follow California’s lead if the law holds up in court. But that isn’t a foregone conclusion, according to Washington Technology Industry Association CEO Michael Schutzler.
“This new California law is unlikely to withstand the test of legal challenges,” he said. “However, the California state government has sent a clear signal — the lack of progress on improving board diversity isn’t tolerable. Note, this isn’t just a gender issue. The lack of black and brown people on boards is an even greater travesty.”
Brown acknowledged that opponents of the California plan have raised “serious legal concerns” in his letter, indicating that those issues may make it difficult or impossible to actually implement the new law. Still, California is charging ahead, becoming a test case and model for a new type of legislation.
“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,” Brown said in his signing letter.
