US: California official calls law mandating women on corporate boards 'toothless'

On Thursday, during the second day of a trial in a lawsuit brought by the US conservative legal group Judicial Watch, on the application of a 2018 law mandating women representatives on corporate boards, a California official testified that the state's historic law was basically "toothless" and ineffective and that there are no plans to sanction corporations that do not comply, AP reported.

According to the 2018 law, all publicly-traded firms based in California must nominate up to three women to their boards of directors or face fines if they fail to do so or fail to complete the necessary documentation.

'No plans to draft regulations or implement fines'

As per the AP report, Betsy Bogart, chief of the Business Programs Division, testifying in a Los Angeles Superior Court on behalf of her boss, the California Secretary of State, said the law is not enforced. “It’s required but there’s no penalty, so it’s essentially voluntary,” Bogart said.

In its lawsuit, Judicial Watch has claimed that it is illegal to use taxpayer funds to enforce a law that violates the equal protection clause of the California Constitution by mandating a gender-based quota. 

Deputy Attorney General Ashante Norton, in his opening statements, said that the secretary of state has no plans to draft regulations or implement fines for not complying with SB826, the Women on Boards law. 

Less than half of California firms in compliance with Women on Boards law

Notably, by the end of 2019, the law required publicly traded corporations with a California headquarters to have at least one woman on their board of directors. As per the law, boards with five or more members must have two women, while boards with six or more members must have three. Failure to submit board compositions to the California secretary of state's office could result in fines of up to $100,000.

However, fewer than half of the state's almost 650 relevant firms reported compliance last year. According to the most recent report, more than half failed to file the required disclosure statement. Then governor Jerry Brown was told by then-Secretary of State Alex Padilla that his agency couldn't enforce the statute as drafted.

Padilla wrote a letter to Brown before he signed the bill into law in September 2018, stating that he supported the law's intentions but that his agency lacked the ability or authority to collect fines, and any attempt by the secretary of state to collect or execute the fine would almost certainly be beyond his power.

On the other hand, according to the advocacy group 50/50 Women on Boards, women held 17% of seats on company boards in California before the law entered into effect, based on the Russell 3000 Index of the country's top companies. Women now hold 30% of board seats in California, compared to only 26% nationally.

(With inputs from AP, Image: Pixabay)