October 12, 2018 Category: gender discrimination
California lawmakers have been busy passing legislation to protect women in the state. Under one of the new laws, California now requires publicly traded companies to have women on the board of directors. This is a significant change from traditional policy. Companies that don’t comply with the new board of director requirements can face six-digit fines for each violation.
What is SB 826?
Senate Bill 826 was signed into law by Governor Jerry Brown on September 30, 2018. Under the new law, any companies located in California that are publicly held must have a “minimum of one female…on its board of directors” by the end of the “2019 calendar year.” By the end of 2021, these companies must have at “2 female directors if the corporation has 5 directors or to 3 female directors if the corporation has 6 or more directors.” In other words, women have to make up a decent percentage of a publicly traded company’s board of directors. By 2021, women must comprise anywhere between 40 and 50 percent of a board’s makeup.
The Secretary of State will be required to publish a list of companies that are in compliance with this new law. Companies that violate the new requirements can be required to pay $100,000 for a first offense, and $300,000 for subsequent infractions.
Why Does California Want Women in Positions of Power?
With SB 826, California is the first state to impose mandatory gender requirements on employers. Why would California take such aggressive measures to ensure that there are women in positions of power in the state? One of the reasons for the legislation is the pervasive nature of sexual discrimination and harassment in the workplace. Most companies are run almost entirely by men. In fact, only one-fourth of all publicly traded companies in California have women on the board.
According to state Senator Hannah-Beth Jackson, corporate America is “one of the last bastions of total male domination.” The state turned its attention to women in positions of power in these companies because “the public and business are not being well-served by this level of discrimination.”
Lawmakers hope that requiring companies to put women in positions of power will have positive effects throughout the state. These include:
- Increasing diversity in the workplace, particularly at high levels where women are underrepresented;
- Reducing the prevalence of sexual discrimination and harassment in the workplace
- Making it easier for victims of discrimination and harassment to come forward to superiors
- Boosting California’s economy
- Improving opportunities for women in the workplace
- Protecting California taxpayers, retirees, and shareholders, and
- Increasing company productivity and growth.
Studies Show that Companies Thrive With Women in Power
California lawmakers believe that requiring companies to have women on the board of directors will not only help gender equality but also be a great asset for those companies. SB 826 cites several studies that show having women in power helps companies. Benefits include:
- Companies with female directors report higher earnings than companies controlled entirely by men
- Companies tend to experience a better return on equity with female board members
- Women create stronger “governance structures” in companies that “create a sustainable future
- Companies with female board members tend to “be somewhat risk averse and carry less debt.”
When companies in California thrive, so does the economy. Forcing companies to take action and put women in positions of power can have positive effects on the individual, family, and community.
Continued Fight to Reduce Sexual Harassment and Discrimination in the Workplace
Sexual harassment and discrimination are serious problems in California and across the country. Placing women in positions of power can have a tremendous impact. Women can create policies, foster a welcoming work environment, and be advocates for victims of discrimination and assault. With more women in positions of power, victims may be more inclined to come forward and report violations without fear of retribution or inaction.
Have you been the victim of sexual harassment or discrimination at work? Contact our San Jose discrimination attorneys to learn about your legal rights and options.