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Thu08062020

Last updateMon, 20 Apr 2020 1pm

California is moving toward becoming the first state to require publicly traded companies to have women on their boards—assuming the idea could survive a likely court challenge.

Sparked by debates around fair pay, sexual harassment and workplace culture, two female state senators are spearheading a bill to promote greater gender representation in corporate decision-making. Of the 445 publicly traded companies in California, a quarter of them lack a single woman in their boardrooms.

SB 826, which won Senate approval with only Democratic votes and has until the end of August to clear the Assembly, would require publicly held companies headquartered in California to have at least one woman on their boards of directors by end of next year. By 2021, companies with boards of five directors must have at least two women, and companies with six-member boards must have at least three women. Firms failing to comply would face a fine.

“Gender diversity brings a variety of perspectives to the table that can help foster new and innovative ideas,” said Democratic Sen. Hannah-Beth Jackson of Santa Barbara, who is sponsoring the bill with Senate President Pro Tem Toni Atkins of San Diego. “It’s not only the right thing to do; it’s good for a company’s bottom line.”

Yet critics of the bill say it violates the federal and state constitutions. Business associations say the rule would require companies to discriminate against men wanting to serve on boards, and conflict with corporate law that says the internal affairs of a corporation should be governed by the state law in which it is incorporated. This bill would apply to companies headquartered in California.

Jennifer Barrera, senior vice president of policy at the California Chamber of Commerce, argued against the bill and said it only focuses “on one aspect of diversity” by singling out gender.

“This bill basically mandates that we hire the woman above anybody else who we may be fulfilling for purposes of diversity,” she said at a hearing.

Similarly, a legislative analysis of the bill cautioned that it could get challenged on equal-protection grounds, and that it would be difficult to defend, requiring the state to prove a compelling government interest in such a quota system for a private corporation.

Five years ago, California was the first state to pass a resolution, authored by Jackson, calling on public companies to increase gender diversity. In response, about 20 percent of the companies headquartered in the state followed through with putting women on their boards, according to the research firm Board Governance Research. But the resolution was non-binding and expired in December 2016.

Other countries have been more proactive. Norway in 2007 was the first country to pass a law requiring that 40 percent of corporate board seats be held by women, and Germany set a 30 percent requirement in 2015. Spain, France and Italy have also set quotas for public firms.

In California, smaller companies have fewer female directors. Out of 50 companies with the lowest revenues, 48 percent have no female directors, according to Board Governance Research. Only 8 percent of their board seats are held by women.

The 2017 study said larger companies did a better job of appointing women, with all 50 of the highest-revenue companies having at least one female director, and 23 percent of board seats held by women.

“The main issue is still that a lot of companies headquartered here don’t have women on their boards,” said Annalisa Barrett, clinical professor of finance at the University of San Diego’s School of Business. “We quite often like to think of California as progressive and a leader on social issues, so that’s kind of disappointing.”

Barrett publishes an annual report of women on boards in California. Public companies are major employers in the state, and their financial performance has a big impact on public pension funds, mutual funds and investment portfolios. “Financial performance does really impact the broader community,” she said.

The National Association of Women Business Owners, a sponsor of the bill, says an economy as big as California’s ought to “set an example globally for enlightened business practice.” In a letter of support, the association cites studies that suggest corporations with female directors perform better than those with no women on their boards.

One University of California, Davis, study did find that companies with more women serving on their boards saw a higher return on assets and equity, but the author acknowledges this may not suggest a cause-and-effect.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Local Issues

April 4 was Equal Pay Day, the day when the average woman finally earned enough to catch up with what the average man had earned by the end of last year. The day started in 1996, when the National Committee on Pay Equity decided there must be a day dedicated to increasing awareness about the gender wage gap.

Interestingly, the co-called “liberal” 9th U.S. Circuit Court of Appeals recently overturned a lower court’s decision and held that it is justifiable when women’s salaries and salary increases are tied to past salary history—even if that history may be discriminatory. The original case involved a Fresno County public schoolteacher, Aileen Rizo, who learned in 2012 at lunch with her colleagues that her male counterparts were making more than she was. A lower court in 2015 ruled in her favor, because, according to U.S. Magistrate Judge Michael Seng, women’s earlier salaries are likely to be lower than men’s because of gender bias.

The three-judge panel of the 9th Circuit overturned that ruling based on a 1982 precedent—thought at the time to be an appropriate reading of the Equal Pay Act of 1963—that employers may use previous salary information as long as they apply it reasonably, and as long as gender is not a consideration.

Critics of the 9th Circuit decision complain that past history should not be a legitimate basis upon which to base future earnings, because if the original salary is lower for the same work, then unequal pay is endlessly justified. Deborah Rhode, a law professor at Stanford Law School, told the Associated Press: “You can’t allow prior discriminatory salary setting to justify future ones, or you perpetuate the discrimination.”

For the record, women made about 80 cents for every dollar men earned in 2015, according to U.S. government data—and women of color earned even less. At least the Lilly Ledbetter Fair Pay Act, the first bill signed into law by President Obama, allows women to sue for compensation back to the original time they were paid less, rather than only when they first discover the difference.

However, based on the 9th Circuit ruling, women can never catch up.

As a former secretary who rose to become a vice president of a national public company, I understand both sides of the equal pay argument. A woman who is paid less when she is hired is stuck with incremental raises based on that lower salary for her entire professional life—meaning she can NEVER achieve equal pay. Companies often get around claims of discrimination by giving jobs different titles, even if the duties are comparable. Yet companies have legitimate concerns that if they equalize women’s salaries, it will cost too much on the bottom line. Plus, the “raises” they would be giving to women to equalize their salaries—for the same work—would be incrementally too high to justify compared to the raises they would be able to give men.

A friend recently handled a complaint by a female producer at a TV network who was being paid less than the male producers. She was told she couldn’t get a raise to equalize her pay, because the increase percentage would be outside of the organization’s salary rules.

In the early 1980s, I became intrigued by the idea of evaluating jobs on an objective scale, even if the work done is not exactly the same—a system called comparable worth. This way of evaluating salary is intended to address discrimination against occupations generally dominated by women, as many jobs have traditionally been segregated by gender. In the past, market forces dictated salaries; women would work for less, and were therefore paid less. However, should an engineer earn more than a librarian?

Comparable worth means evaluating jobs based on a range of objective factors like internal/external work environment (meaning a higher score for driving in the rain than for sitting in an office); access to confidential information; required education or skill training; interaction with customers/clients; and so on. Should a schoolteacher earn less than a truck driver? 

In the 1970s and 1980s, comparable worth policies were implemented by several city and state governments. In San Jose, for example, jobs were evaluated, and adjustments to equalize salary levels were made gradually, over a 2-year period. In other words, it can be done.

Almost 30 years ago, when I led the local chapter of the National Organization for Women in Palm Springs, I was often consulted on issues that involved equal treatment. One woman, a long-time professional server, had applied for a job at a new country club restaurant. “I was told they’re only hiring men,” she said.

“I’ll call them for you,” I replied, “because that’s illegal discrimination.”

“Oh, no,” she responded. “If you do that, the word will get around, and I’ll never be able to get a job anywhere in the valley.”

Another woman claimed she had experienced sexual harassment at a local restaurant. She wanted it to stop—but the manager was also part of the problem, and she was afraid that if she complained, she would lose her job, or her working life would be made miserable, and she’d be blackballed at other local restaurants. “I’m afraid to make waves,” she said, tearfully.

If women are afraid to go public, and can’t win in the courts based on 30-year-old judgments, how can we ever get to a point where we no longer need Equal Pay Day? 

I have a solution: Since raising all underpaid women’s salaries would clearly hurt the bottom line, and since men are surely never going to agree to pay cuts down to the level of their female colleagues’ salaries, why not split the difference?

If men have to take a little less so their wives can get a little more, what’s the big deal?

Anita Rufus is also known as “The Lovable Liberal,” and her radio show airs Sundays at noon on KNews Radio 94.3 FM. Email her at This email address is being protected from spambots. You need JavaScript enabled to view it.. Know Your Neighbors appears every other Wednesday.

Published in Know Your Neighbors