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Do you freelance in California? Have a side hustle? Drive trucks? Work construction? Do nails? Work on political campaigns? Then you should be paying attention to a major employment fight coming to a head in Sacramento.

In the coming weeks, the state Senate will begin hearings on a bill that will make it harder to classify workers as independent contractors, officially codifying a sweeping 2018 California Supreme Court decision. The so-called “Dynamex” bill, supported by organized labor and named for the court case, has made headlines for threatening the on-demand business model made popular by the likes of Uber, Lyft, DoorDash and Postmates.

Less discussed, however, is the extent to which Assembly Bill 5 could sweep up some 2 million workers across industries far from the sharing economy and tech sectors, from truck drivers and general contractors to nail salons, strippers and perhaps even the freelance writers for this newspaper. The proposal has so unsettled mainstream businesses that they’ve banded together with sharing economy disruptors to run an “I’m Independent” campaign.

The legislation would rewrite the rules for when a worker is deemed an official employee, upending longstanding employment practices by winemakers, private investigators, music schools and other enterprises.

“Does AB 5 have very wide repercussions? Yes, that’s what makes the negotiations very complicated,” said labor-rights attorney Bill Sokol, who teaches employment law at San Francisco State University and is not a part of the negotiations.

California has long led the nation on employment practices, and AB 5 may be just the beginning as policymakers wrestle with updating labor codes in today’s app-for-hire world. Though the high court decision clearly raised the bar for treating workers as independent contractors rather than full employees, the devil is in the details that will be spelled out in the pending legislation.

AB 5 is being lobbied heavily both by business advocates and by organized labor, which seeks to ensure that gig-economy workers have workplace protections, including the right to collective bargaining. It has also put Gov. Gavin Newsom, who wants to be viewed as an ally to both labor and tech, in an awkward position.

“Everything is up for grabs,” Sokol said. “There’s no way to predict who’s going to end up with what. But labor recognizes that the American workplace they have traditionally organized—those worker relationships—have changed, and the laws have not kept up with them.”


Labor groups led by the 2 million-member California Labor Federation have united behind the proposal to limit the use of independent workers. Their contention: The gig economy has opened the door to mass exploitation of low-wage workers, a trend that is worsening income inequality.

Too many employers misclassify employees in order to cut costs, the unions argue, and strong curbs on the use of independent contractors, who aren’t eligible for many of the benefits and workplace protections mandated for regular employees, would slow that. Those curbs would also make it easier to reach groups, such as general contractors, that have long been difficult to organize.

But business advocates warn the change would dramatically ramp up labor costs in California, and have dire consequences for the state’s economy. In some sectors, such as ridesharing, widespread contracting isn’t even the long-term business model—it’s just an intermediate phase on the way to automation. Uber or Lyft, both headquartered in San Francisco, might stop operating in California altogether, they say.

Their hope is to carve out a third way that would allow employers to grant some benefits without having to categorize workers as full employees.

“We have a completely different economy,” said Jennifer Barrera, executive vice president at California Chamber of Commerce. “We have a huge group of individuals who really value their flexibility and control over their own schedule, and I don’t think it has to be one or the other.”

The California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles dealt with a same-day courier service that, to save money, had converted all its employees to independent contractors. A former employee claimed the shift was a Labor Code violation, and the litigation that ensued ended up reinterpreting a longstanding test for classifying workers. The ruling instead established a three-part test for certifying independent contractors, with the highest hurdle being that the work performed must be outside the core of the company’s business.

Even though the Dynamex decision is already law, labor representatives say many companies have been flouting it. AB 5 would ensure that workers would not have to file suit on a case by case basis to seek enforcement.

“There’s a whole bunch of things that they’re currently being cheated out of, frankly,” said Steve Smith, with the Labor Federation. “With respect to Uber and Lyft, it’s the exploitation they subject their workers to on a daily basis. Many of these workers are not receiving minimum wage; they are misclassified as contractors when they actually should be considered employees, meaning there’s a whole host of benefits they’re not getting that they should get like everyone else.”

In steering more people to employee status, the bill would force companies to offer basic worker protections such as guaranteed minimum wage, overtime pay, contributions to Social Security and Medicare, unemployment and disability insurance, workers’ compensation, sick leave and family leave. Workers could also get reimbursed for mileage and maintenance of their vehicles.

The state estimates it loses about $7 billion a year in payroll-tax revenue due to worker misclassification that could be supporting schools, roads and other public services. And by avoiding unemployment insurance taxes and workers’ compensation premiums, businesses shift the burden to the state when workers get laid off, get sick or get injured on the job.

“These billion-dollar companies can complain, but we have to ask ourselves as taxpayers: Should we subsidize their business by subsidizing their workers?” said Assemblywoman Lorena Gonzalez, a former labor organizer from San Diego who is author of AB 5. “That’s what happens when you don’t adequately compensate workers.”

She dismisses the idea that Uber and Lyft will flee the fifth-largest economy in the world. More likely, the lawmaker predicts, Uber and Lyft will make the changes required by law, because there’s a massive market for transporting individuals and goods in California. If they can’t manage it, she says, then someone else will.


Gonzalez’s bill is triggering pushback in part because the impact of the high court ruling is far broader than many Californians expected. Gonzalez says she’s heard, for instance, from newspaper publishers who want to keep using freelance journalists and beauty salons that rely on nail technicians. She’s even rattled folks in her own world of politics, because her bill would reclassify campaign workers as employees, not contractors.

Chris Shimoda, vice president of government affairs with the California Trucking Association, says trucking has been a pathway for people without advanced degrees to make more money. In fact, about 80 percent of drivers in the industry have a high school education or less, he said. But if firms are required to employ their own drivers, independent drivers who own their own $150,000 Class 8 heavy duty trucks may not be able to find work.

“We all agree there should be a pathway, especially for the blue-collar working class to rise up the economic ladder,” Shimoda said. “It’s just: What are the rules for the labor and employment law side of things? If there are specific things that have been abused, then what are those, and how do we reconcile that through this bill?”

As his association works to ease the potential impact of AB 5 on those drivers, the trucking industry has challenged the Dynamex decision in federal court, arguing that federal laws governing motor carriers pre-empt the state test.

Peter Tateishi, chief executive officer of the Associated General Contractors of California, which represents construction firms, said the bill would disadvantage small businesses, many of which are women-owned and minority-owned firms, that subcontract with builders, because contractors won’t be able to get outside help.

As for Uber and Lyft, the rideshare companies have sought compromise and held back-channel negotiations with the Teamsters and Service Employees International Union. The Labor Federation, however, remains committed to full employment status for rideshare workers. As a result, the gig economy companies have sought support in the court of public opinion.

In an open letter, Uber Chief Executive Dara Khosrowshahi and Lyft co-founders Logan Green and John Zimmer proposed maintaining their drivers’ freelance status but granting access to some employee benefits such as paid time off and retirement accounts. The executives, whose combined worth is over $1 billion, offered to form a new driver association to advocate for the drivers’ interests.

“We are public companies that tens of millions of people rely on for mobility and work,” they wrote. “If there ever was a time for new policies, it’s now.”


This week, the “I’m Independent” coalition led Uber and Lyft drivers around the Capitol to meet with lawmakers and staff to voice their desire to remain freelancers.

“I’m very offended that they would think they’re doing us a favor by calling us employees,” said Vivian Mallory, a 60-year-old Uber driver in Sacramento. “We want better rates, and we want more opportunities for benefits. I think we’re not against the bill being passed, but I think we want changes in the language.”

Mallory says she’s strategic about picking up longer rides that pay more and was able to average $4,800 a month last year driving. Another Uber driver, James Kyle, 58, of Roseville, said he needs to remain an independent contractor, because he works seasonally at charity golf tournaments.

“They’re taking the fun away from it,” Mallory said.

AB 5 supporters counter that drivers will continue to maintain a flexible schedule, because rideshare companies, like any employer, can pay wages based on the number of hours worked.

On the other side are drivers like 62-year-old Ann Glatt, who joined the Gig Workers Rising movement after noticing her share of fares declining over time with Lyft. She says she’s lucky to make $700 a week and would like to see changes to the way the rideshare companies categorize their drivers.

“Teachers are in unions. We’re not able to unionize because we’re independent contractors,” Glatt said.

She added that the labels put on drivers can be misleading.

“Uber and Lyft are not transportation companies—they are platforms. So that makes us customers, and the passengers are the end user. But really it kinda just means Uber and Lyft are not responsible for basic labor standards for people,” she said.

After speaking to CALmatters, Glatt said she stopped driving Lyft because she wasn’t able to make ends meet.

Requests for exemptions have so far succeeded in some sectors. Gonzalez has agreed to leave doctors, insurance agents, real estate agents, hair stylists/barbers who hold a booth rental permit, dentists, architects, engineers and accountants out of the law.

But business interests are pressing for more. Barrera said CalChamber would like to carve out licensed occupations, from court reporters to family therapists. While the author is committed to sorting through more positions, Gonzalez said the exemptions will need to stop at some point.

“I have a driver’s license,” she said. “That doesn’t make me a business owner.”

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

Published in Politics

When California passed the nation’s first law to give consumers control over their personal data last year, legislators built in an unusual buffer—an extra year to change the law before it takes effect in 2020.

Lawmakers and lobbyists are now making use of that time, submitting at least 20 bills in recent weeks that would adjust, tweak or perhaps ultimately gut California’s unique privacy protections.

Privacy advocates are fighting to make the law even broader, while businesses and tech companies want to see it narrowed. The dynamic could force lawmakers to choose between constituents who overwhelmingly feel they have lost control of how their personal information is collected and used, and businesses (including many campaign donors) who argue that broad privacy protections could fundamentally damage the internet economy.

The issue landed in the Capitol with huge urgency because of a San Francisco real estate developer named Alastair Mactaggart. Last yearhaunted, he has said, by a dinner-party chat with a Google engineer who told him Americans would be stunned to know what the tech giant knew about themhe spent $3.2 million to put a data-privacy law on the ballot. Tech companies poured $1 million into a campaign to fight it, then decided they’d rather seek a compromise in the Legislature. Lawmakers rushed to pass a privacy law last summer, and Mactaggart pulled his measure off the ballot.

“I was aware when I withdrew the initiative that that would open us up to the possibility of change, both bad and good,” Mactaggart said to a panel of lawmakers this month. “I believe you guys are going to do a great job defending this bill, and making sure that when it goes into effect next year, it’s a great bill for California and for the world.”

The law requires that companies tell customers what information it collects about them and to whom they sell the data. It also requires that companies give customers an easy way to opt out of having their data sold, and limits how much more they can charge those who do.

It’s too soon to say exactly how or whether lawmakers will wind up changing the privacy law. Many of the bills that have been introduced are mere placeholders, and it’s still early in the legislative year. A lot can change before lawmakers cast their final votes in September.

But a few general themes have already emerged. Here’s what to watch as California’s privacy battle unfolds:

Teeth are a big fight: A key aspect of last year’s compromise between tech companies and privacy advocates was minimizing the opportunity for lawsuits. Under the deal they reached, the law only allows lawsuits over data breaches. But that’s now up for debate, with new bills giving Californians the right to sue companies that break other aspects of the privacy law, such as if they don’t give customers the opportunity to opt out of having their data sold or don’t delete data upon customers’ requests.

“In order to make sure they comply with the law, we need to make sure people can exercise their rights,” said Democratic Sen. Hannah-Beth Jackson, of Santa Barbara, who is carrying a bill that would expand the ability to sue under the privacy law. “If you don’t violate the law, you are not going to get sued.”

Big business is likely to push back hard.

California Chamber of Commerce lobbyist Sarah Boot said changing the privacy law to allow for more lawsuits would trigger “a class-action bonanza.”

“Frankly, our court system can’t handle that. California businesses can’t handle it. And the California economy can’t handle that,” Boot said in a hearing before Jackson’s bill was introduced.

Another flashpoint is a change the tech industry wants—limiting which bits of information consumers can opt out of having sold. Tech companies argue that the law should be narrowed so they can still exchange non-identifiable information with advertisers about, for instance, users’ devices and operating systems.

“Treating this as the sale of personal information jeopardizes the underpinnings of the internet,” said Internet Association lobbyist Kevin McKinley.

Privacy advocates caution that some changes that seem small may actually weaken the law.

“Powerful tech companies and their clever lobbyists know how complex privacy policies are, and what they may present as a small tweak here and there can fundamentally change the entire law and completely obliterate the rights people have,” said a statement from Jim Steyer, CEO of Common Sense Media, a nonprofit that is part of a coalition of privacy advocates.

Politics aren’t on usual lines: Lawmakers passed the privacy bill last year with a sweeping bipartisan vote, and the issue continues to resonate across the political spectrum.

Republicans—trying to make themselves relevant in a Legislature where Democrats have an enormous majority—have introduced a package of privacy bills, including one that would require social-media companies to permanently delete data when people delete their account, and another that would prohibit companies from saving the voice commands people give smart speakers such as Amazon’s Alexa.

GOP Assemblyman Jordan Cunningham said he’s gotten some blowback from business lobbyists who are used to having Republicans on their side.

“Some people are like, ‘What are you guys doing?’” said Cunningham, of San Luis Obispo. “Privacy is a nonpartisan issue to me. It’s a nonpartisan issue to my constituents. When I talk to people in my district, they uniformly want this stuff. They know their data is being used in ways they’re not aware of.”

Democrats control the legislative process, so one political question to watch is whether they allow Republican privacy bills to advance, or quietly kill them. The other political question is whether Democrats themselves will split over any of the proposals, as happens on many fights in the Capitol that impact big business.

“I think there will be a real battle between the pragmatists and the idealists,” said Steve Maviglio, a Democratic political consultant who worked on the tech companies’ brief campaign against the privacy ballot measure. “That’s where it’s going to lie.”

Washington is a wildcard: While California is debating changes to its privacy law, federal lawmakers are also considering a nationwide version. At a pair of recent hearings in Washington, House Democrats vowed to get tough on tech companies, and Senate Republicans said they would like to pass a national privacy law that overrides California’s.

Internet companies would prefer a single national law over a patchwork of rules across the states. Privacy advocates, meanwhile, have argued that any nationwide privacy law should be structured to set a tough minimum baseline of privacy protections upon which state laws could build.

Built into the argument is the sense, on both sides, that California’s size and market influence will do for internet regulation what it did for rules around auto emissions—force the industry to essentially default to California’s regulations as the national standard.

There, too, California politics could be a factor.

Mactaggart said he thinks it’s unlikely that Congress will pass a law that would substantially weaken California’s, given the size of the state and the prominence Californians hold in the House—both the speaker, Democrat Nancy Pelosi, and the minority leader, Republican Kevin McCarthy, hail from the Golden State.

“It’s going to be hard for them to step in and gut a law that protects one in eight Americans,” Mactaggart said.

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

Published in Politics

The California Legislature, controlled by Democrats for decades, will be even bluer when the new class is sworn in. Exactly how many more Democrats have been elected is still not certain, because it takes a long time to count votes in California. But all signs point toward growing Democratic caucuses in both the Assembly and the Senate—and a supermajority that sidelines Republicans to near-irrelevancy.

That means the prevailing tension in the statehouse probably won’t be between Republicans and Democrats—but between different shades of blue. It could make for some counter-intuitive outcomes—including a Legislature that skews more toward business on some fights.

The biggest shift appears to be taking place in the state Senate, which in recent years has been the more liberal of the two houses. It is poised to tick toward the center, with two business-backed Democrats winning Los Angeles-area seats previously held by labor-friendly Dems, and two rural Democrats apparently flipping Republican-held seats in the Central Valley.

“It’s very significant,” said Marty Wilson, executive vice president of the California Chamber of Commerce, which lobbies for major business interests. “We have an opportunity to have a more profound impact on the Senate.”

Business PACs including Wilson’s poured at least $6 million into electing Democrats Susan Rubio of Baldwin Park and Bob Archuleta of Pico Rivera, who secured solid wins on election night.

Two other Democrats—Melissa Hurtado of Sanger and now-Assemblywoman Anna Caballero of Salinas—pulled ahead of their Republican opponents earlier this week in updated vote counts, apparently assuring the Senate of a Democratic supermajority. Representing Central Valley districts that stretch through California’s farm belt, the pair would bring a different perspective to the Senate Democratic caucus, which is now dominated by representatives from big cities and progressive coastal enclaves. That means not only more potential interest in water and farm policy, but also on how proposals impact inland jobs and health care.

“The issues the Central Valley and other parts of rural California face will get more attention in the caucus, because there will be more advocates on behalf of those regions,” said Bob Sanders, a Democratic political consultant who worked on campaigns for Hurtado and Caballero.

Caballero gained a track record as a business-friendly moderate during six years in the state Assembly. Democrats poured more than $4 million into her Senate race against Republican Rob Poythress for a Merced-area seat that had previously been held by Anthony Cannella, a moderate Republican. Poythress was backed by $1.9 million from the GOP.

Hurtado is a health-care advocate who sits on the Sanger City Council. Democrats spent $2.4 million to help her wrest the Fresno-area from GOP Sen. Andy Vidak of Hanford, who was helped by $428,000 from his party.

“What was different this time were the issues,” said Democratic consultant Lisa Gasperoni, who worked on Hurtado’s campaign.

Instead of focusing on water and agriculture, as most politicians do in the Central Valley, Hurtado emphasized health-care access and environmental health, Gasperoni said.

“Those issues were way more potent than I’ve ever seen them,” she said.

Wilson, whose PAC supported Vidak, said the Republican likely suffered from blowback by voters upset by President Trump.

“I think a lot of it was attributable to Trump going out there and railing on caravans,” Wilson said. “It does have a negative impact on California.”

With results still being tallied, Democrats have been cautious about declaring victory. But late ballots generally skew more liberal, so Democrats may pick up additional seats in the Assembly, where they have already flipped two.

With supermajorities in both chambers, Democrats—in theory—could pass taxes, change the state’s political ethics law, and put constitutional amendments on the ballot without any Republican support. In reality, however, it’s difficult to get all Democrats to agree on controversial proposals—a challenge that could complicate Gov.-elect Gavin Newsom’s agenda, which is ambitious, expensive and could require a tax increase. Many legislators are spooked by the successful recall this year of Democratic Sen. Josh Newman over his vote to increase the gas tax.

Still, with a union-backed governor-elect whose leanings are more progressive than Gov. Jerry Brown’s were, organized labor sees benefits to the growing number of Democrats in Sacramento, even if some of them come with backing from more conservative business interests.

“We’ve got a good situation with a very pro-worker Legislature in both chambers,” said Steve Smith, spokesman for the California Labor Federation, a union group.

But he acknowledged that with more Democrats come more factions—and disagreements that may not fall along traditional fault lines that, for example, pit environmentalists versus the oil industry. The gig economy presents new political issues that may divide Democrats next year, as tech companies will likely push to change a court ruling that limits the use of independent contractors, and labor unions work to hold it intact. Some Democrats who are progressive on environmental issues may skew more business-friendly when it comes to pressure from Silicon Valley or charter schools.

“This is not your grandfather’s labor versus business fight any more,” Smith said. “There are all kinds of layers that didn’t exist 20 years ago.”

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

Published in Politics

Patricia Brooks said it was sexual harassment when she was taking a call as a 911 dispatcher in San Mateo and a colleague reached his hand inside her bra and fondled her breast.

The courts disagreed in 2000, saying it wasn’t sexual harassment because the single incident didn’t amount to a “severe or pervasive” problem—the legal standard necessary in a civil suit. That decision led to a long-standing legal interpretation that critics say has allowed harassers “one free grope.” But not anymore.

A bill Gov. Jerry Brown signed over the weekend rejects that interpretation, clarifying that a single incident of harassment can be enough to meet the legal standard. In other words, starting on Jan. 1, California law essentially says: “Actually, no free gropes.”

It’s one of the more tangible changes Californians can expect from a suite of bills Brown signed that were inspired by the #MeToo movement, which erupted last year after The New York Times and The New Yorker exposed abuse by film producer Harvey Weinstein in coverage that eventually grew into global demands for change. In California, lawmakers introduced more than two dozen bills to combat workplace misconduct and hold offenders accountable.

Brown finished acting on them on Sept. 30, the constitutional deadline for him to sign or veto bills for the year, and the final opportunity for him to make laws as he nears the end of his historic four terms as governor. Brown’s decisions on the #MeToo bills reveal his penchant for, as he once famously described it, paddling a little on the left and a little on the right.

He sided with victims’ advocates in some cases, signing bills that put California at the forefront of clamping down on harassment. In other cases, he sided with employers, vetoing bills they said were too onerous.

“While there was definitely some great progress on the bills he did sign, we have a long way to go on preventing sexual harassment, especially on the particular challenges that low-wage workers face,” said Jessica Stender, a lawyer with Equal Rights Advocates, a sponsor of some of the bills, including the one providing guidance on the legal standard for harassment suits.

On the flip side, business interests concerned about litigation abuse said the lower standard will amount to a huge expansion of liability.

“It is going to significantly increase litigation,” predicted Caitlin Colman, a lobbyist for the Civil Justice Association of California. “It does not apply to just sexual harassment; it applies to all harassment claims.”

Samantha Corbin, a lobbyist who wrote an open letter last year decrying a culture of harassment in California’s political scene that was signed by hundreds of women, said she was disappointed but not surprised by Brown’s vetoes. Her advocacy group, called We Said Enough, lobbied for 13 anti-harassment bills this year. The governor signed eight and vetoed five.

“This governor has always strived for balance, particularly when you’re looking at contentious issues in the national spotlight,” Corbin said. “It’s very rare for him to go all in on one side.”

Brown signed bills that will:

  • Prohibit employers from requiring employees sign non-disparagement agreements.
  • Prohibit secrecy clauses in settlements for sexual misconduct, unless the complainant wants one.
  • Require employers with five or more employees to provide sexual harassment prevention training to both supervisors and staff.
  • Require California-based companies to add more women to their boards.

He vetoed bills that sought to:

  • Require the state government to track harassment complaints and settlements in an annual public report.
  • Get rid of arbitration clauses in employment agreements, making it easier for workers to sue rather than resolve conflicts in private arbitration.
  • Require large businesses to keep harassment records for at least five years.
  • Extend the amount of time harassment victims have to file complaints, from one year to three years.

“Employees who have experienced harassment or discrimination in the workplace should have every opportunity to have their complaints investigated,” Brown wrote in his veto of Assembly Bill 1870 to extend the amount of time victims have to complain. “I believe, however, that the current filing deadline—which has been in place since 1963—not only encourages prompt resolution while memories and evidence are fresh, but also ensures that unwelcome behavior is promptly reported and halted.”

Some advocates complained the bills Brown signed will largely help women working in professional settings, while those he vetoed were aimed at helping low-wage workers such as janitors, maids, waitresses and sales clerks.

“It seems the #MeToo protections won’t extend to women who don’t have a certain standing, access to attorneys or a level of existing power,” Democratic Assemblywoman Lorena Gonzalez Fletcher wrote on Facebook the night Brown vetoed several of her bills, including the one to ban mandatory arbitration, a practice to which more than half the nation’s nonunion private-sector workers are subject.

“It’s pretty hard to celebrate the gains for women who have the same educational and access advantages as I do, while denying any gains for women like my mom and grandmother who never had those opportunities. You shouldn’t need a Twitter account or an attorney to not be abused in your workplace. And some day, you won’t need either ... we don’t give up that easy.”

Brown’s veto said her anti-arbitration bill violates federal law. The California Chamber of Commerce had deemed it a “job killer,” saying it could burden businesses with an avalanche of lawsuits. Arbitration agreements “expedite the resolution of claims in a less costly environment than sending all claims through an overburdened court system,” the Chamber said in a statement.

The fight is certain to continue next year, after Californians choose a new governor. Gonzalez Fletcher may have a critical ally in her corner: One person who lobbied for her anti-arbitration bill this year was feminist filmmaker Jennifer Siebel Newsom. She, of course, is married to Lt. Gov. Gavin Newsom, the front-runner in the race for governor.

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

Published in Politics

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