California is the first US state to require a woman on company boards

Image: Reuters/Andrea Comas
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If companies want to be based in California, they’ll need at least one woman on their board. A bill signed into law by governor Jerry Brown has made California the first state in the nation to require female representation on corporate boards.

By 2019, every public company headquartered in the state must include at least one woman on the board of directors, or face a fine. By 2021, the law will require nearly equal representation, with at least two women required for five-person boards and three women for six-person boards. (You can read the full bill here.)

Brown didn’t sugarcoat the challenges of implementing such a law. It will undoubtedly face numerous constitutional challenges in court. But he wrote in a signing statement that the time has come, especially given “recent events” in the US capital, which has been riveted, along with much of the country, by the Senate confirmation hearings of US Supreme Court nominee Brett Kavanaugh.

“I don’t minimize the potential flaws that may prove fatal to its ultimate implementation. Nevertheless, recent events in Washington D.C.—and beyond—make it crystal clear that many are not getting the message,” 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,” he continued.

This will be a major wakeup call for many companies. CALmatters, a nonprofit covering state government and state regulation, reports that a quarter of the 445 publicly traded companies based in California still don’t have any women on their boards. They include some household names like Skechers, the shoe company based in Manhattan Beach.

Nationwide, women occupy only 16% of all available seats in the Russell 3000, an index of the 3,000 largest US public companies. At the end of 2017, there were 624 companies in the index with no women on their boards. (See the full, searchable list here.)

While a mandated quota is new in the US, in Europe, the trend is well established. Norway, Germany, Spain, France, and Italy all have quotas in place for public firms—and while they remain controversial, there’s evidence that they’re working.