California revokes ‘women on boards’ mandate

The ruling follows a similar decision on ethnic, racial and LGBTQ+ representation on Californian boards

A California law requiring companies headquartered in the State to have one or more women on their boards has been struck down by a judge, signifying a growing battle between the liberal left and conservative right in the State.

Judge Maureen Duffy-Lewis in the Superior Court of California for Los Angeles County declared that the 2018 gender diversity law, which required firms with six or more board directors to have at least three women, and smaller firms with boards to have at least one, was unconstitutional.

The case to outlaw the mandate was led by Judicial Watch, a conservative non-profit organisation on behalf of a group of Californian tax-payers. California’s Secretary of State is said to be reviewing the verdict.

The latest ruling was made on May 13th because the State failed to prove the link between improved gender diversity on boards and financial performance. Judge Duffy-Lewis also said that academic research proved “inconclusive.”

The ruling is ironic as California was the first US state to mandate women on boards. As a global centre of tech, via the new ruling, the State has also potentially hindered the career progression of women in some of the world’s most successful tech firms.

The decision follows a previous blow to board diversity initiatives in a state long known for its liberal approach in all areas. In April this year, the same court repealed a State law requiring Californian companies to have a minimum of ethnically or racially diverse LGBTQ+ people on their boards.

The latest ruling is at odds with the progress of other organisations and institutions both in the US and abroad on diverse board representation.

Last year, the Nasdaq stock exchange was approved to require listed companies to have at least one diverse board member by 2023, with companies that don’t need to explain why. However, this is not a mandate but is based on a ‘comply or explain’ basis.

On the continent, European Commission President Ursula von der Leyen wants the bloc to implement new legislation mandating more women on boards.

It will be interesting to see State, national, and international responses to the latest Californian board ruling.

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