Can a state mandate gender representation of corporate boards — or do such quotas amount to an unconstitutional form of discrimination? California passed a law last year requiring all corporations with executive offices in the state to include at least one woman by the end of this year, and to have a representative number on boards by 2021. Thus far, they are the only state to mandate representation, which means they will be the first state to have to defend the quota in court:
Under California’s law, OSI would be required to have at least one woman on its board by the end of 2019, and at least three by the end of 2021. OSI did not immediately return emails and phone calls requesting comment about the lawsuit.
But the lawsuit filed Wednesday in the U.S. District Court for the Eastern District of California claims that the state’s mandate is unconstitutional and in violation of the equal protection clause because it discriminates on the basis of sex, and that requiring Meland to consider gender when voting to add members to OSI’s board forces him to discriminate. …
State Sen. Hannah-Beth Jackson (D), who sponsored the legislation, defended the law’s constitutionality Thursday.
“I certainly respect the constitutional right of anyone to challenge the law in our courts,” she said in a statement to The Post. “However, I strongly believe that this measure meets constitutional requirements and will be held up in court. Significant research has shown the importance of adding women to boards to improve profitability and add to the economic well-being of the state, as well the interest of the state to advance gender equality.”
It’s not the first challenge to the state’s corporate-board quota mandate. Judicial Watch filed suit in August, but took a different strategy in crafting the complaint. Rather than represent a shareholder, Judicial Watch filed on behalf of three taxpayers objecting to the use of public funds to enforce this new law:
California’s first-in-the-nation law mandating women on boards of publicly held companies is facing what appears to be its first legal challenge.
Judicial Watch, a Washington-based conservative activist group, said in a lawsuit filed this week on behalf of three California taxpayers that spending taxpayer money enforcing the law is illegal under the California constitution. …
“California’s gender quota law is brazenly unconstitutional,” said Judicial Watch President Tom Fitton in a statement Friday.
The group is suing California Secretary of State Alex Padilla, whose office is responsible for enforcing the law.
Padilla is the respondent in both suits, the usual pro forma designation when challenging a state law. California plans to defend the law vigorously, but it may be an uphill battle. The Supreme Court has grown skeptical of the use of racial/ethnic bases for admission to schools, for instance, and ruled outright in 1978’s Bakke case that such quotas were unconstitutional. Under Bakke, universities were permitted to continue affirmative-action admission programs but could not set aside slots for minority students. And it’s worth pointing out that the court has continued narrowing the use of those admission practices and hinted at calling a halt to them in the not-so-far-off future.
This is essentially the same kind of set-up, only in this case the state is mandating the set-asides rather than corporate boards doing it themselves. That sounds much more problematic as a public policy than the case of Bakke, given the use of state power to demand discrimination for one or more seats on private corporate boards. It seems unlikely that such a system would withstand scrutiny as a policy for state-run boards, let alone private-sector boards.
Pacific Legal Foundation’s Anastasia Boden, who will represent OSI in this latest lawsuit, warned that the law would fail the strict scrutiny applied by courts under the 14th Amendment’s Equal Protection Clause. More importantly, Boden argues, it’s counterproductive and unnecessary:
Between 2010 and 2015, the share of women on corporate boards increased by 54% globally. Women now hold about 20% of board positions for the 500 U.S. corporations that make up the Standard & Poor’s index. In Illinois, every public company is already compliant with the proposed mandate. Of the largest 3,000 public companies, 84% have at least one woman on their board, making them already compliant with any of the proposed mandates.
You’d never know that from the legislation, which implies that companies must be forced to hire women, or that women are being discriminated against even when they are not. Worse, the laws will likely undermine many future gains women make by casting doubt on whether a woman is being hired based on her merit or to meet a quota.
Because it can be difficult to distinguish “benign” discrimination from more malignant kinds, the Supreme Court subjects any law that contains a gender classification to rigorous judicial scrutiny. Under the 14th Amendment’s Equal Protection Clause, such laws must be “substantially related” to an “important government interest.” Mandatory female board representation probably fails that test.
Proponents of the “woman quota” argue that increasing the number of female board members will have a trickle-down effect that will result in more women in management positions and more female-friendly policies. But evidence from countries that have imposed quotas show this outcome is unlikely.
One can certainly argue that corporate boards should have more female representation, for a variety of reasons, fairness and justice among them. It’s quite another to say that government should force that to happen in a system where we’re striving for equality of access rather than mandated distribution by force of law. The latter does nothing to elevate the dignity of those whom it supposedly serves.
California, unfortunately, has no small history of passing silly and sometimes often unconstitutional and unenforceable laws. This will likely prove to be another such case, assuming it ever makes its way to the Supreme Court before the state rethinks its position.