Regulatory Commissars

California to Enact Corporate Female Quotas?

Businesses must appoint women to their boards or face hefty fines. That's a bad idea.

Jordan Candler · Sep. 12, 2018

Golden State leftists are venturing to take affirmative action to a whole new extreme via legislation that was passed in August. Gov. Jerry Brown is quickly approaching the signing deadline, and his choices are to either derail the bogus legislation or set an uncanny precedent. Sadly, in California politics, the latter typically rules the roost.

According to The Wall Street Journal, “The law requires a company to appoint one woman to its board of directors by the end of 2019. By the end of 2021 a five-member board would need to have two women, while boards with six or more directors would need three.”

Noncompliance could result in a $100,000 fine, whether it be a failure to file adherence reports or neglecting to hire at least one token woman. That fine jumps to $300,000 for serial violators.

As is typically the case, California is chasing a mostly nonexistent problem. As the Journal goes on to report, “More than a third of new directors appointed in the second quarter this year were women, according to corporate-data firm Equilar. Only 17.1% of Russell 3000 companies had all-male boards in the same period, down from 19.5% the previous quarter. Deloitte found earlier this year that the number of white men on Fortune 500 boards decreased 6.4% between 2012 and 2016.”

More importantly, “The point of a corporate board is to represent the interest of shareholders who own the company,” the editors note. “That requires experience, expertise and judgment.” Furthermore, “There’s also the question of whether these quotas are legal. The California Civil Code, the California Constitution and the U.S. Constitution proscribe sex-based discrimination, and the Supreme Court has consistently ruled that explicit quotas are illegal.” But hey, this is Kalifornia we’re talking about here! Rules need not apply.

If the bill is signed into law, fallout is inevitable. “Many companies would merely create a new board seat and appoint a woman to check this government box,” the Journal observes. “Male minorities could also lose seats to white women as other companies comply without growing the board. If minorities lose ground, will there be new quotas based on race?” And it’s not like there isn’t statistical evidence in places like Europe. In Norway, quotas have vanquished board maturity, driven up acquisitions, and adversely affected company operations. Business are already leaving high-tax blue states in droves. Gov. Brown would be wise to keep that in mind before putting his name on this affirmatively ludicrous bill.

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