Companies Headquartered In California Can No Longer Have No Women On Their Boards

by Christina Marfice
Image via gmast3r/Getty Images

Publicly traded companies in California are now required by law to diversify their boards

According to Forbes, women held only 19 percent of board seats at the 1,000 largest U.S. companies ranked by revenue last year. Less than one in five board members is a woman, in a country where women make up 55 percent of the total population. That’s obviously not great. So California found a way to work toward fixing it.

As of Sunday, a state law in California will require publicly traded companies to include women on their boards. By the end of 2019, all of them will be required to have at least one female board member. By the end of 2021, companies with boards of at least five members will be required to have at least two women serving, and companies with six or more board members will be required to have at least three women. Companies that don’t comply will face financial penalties.

Measures like this one are common in European countries, but this is the first such law to be enacted in the U.S. It was passed by California’s state legislature last month and signed into law by Governor Jerry Brown over the weekend.

According to Sen. Hannah-Beth Jackson, one of the legislators who fought for this law, “one-fourth of California’s publicly traded companies still do not have a single woman on their board, despite numerous independent studies that show companies with women on their board are more profitable and productive.”

“With women comprising over half the population and making over 70% of purchasing decisions, their insight is critical to discussions and decisions that affect corporate culture, actions and profitability,” Jackson added.

Of course, there are people fighting back against this. Opponents love to make the argument that forced inclusion of women will lead to unqualified women being given board seats. As if men are given the vast majority of seats because there are no qualified women available. Of course there are plenty of qualified women — many more women than men now pursue higher education, a huge reversal from previous generations. But research has shown for years that women are often passed over in hiring situations in favor of men, even if candidates of both genders have equal qualifications. This California law seeks to combat that gender bias in hiring, not force unqualified women onto company boards. Come on, people.

Anyway, this is one small step toward real diversity. But it still doesn’t address hiring bias against people of color or members of the LGBTQ community, especially trans women or gender noncomforming people. There’s a lot of work still to be done. Lead the charge, California!