Active: Federal lawsuit challenges California’s sex-based corporate board quota

A law enacted in 2018 forces publicly traded companies incorporated or headquartered in California to have a certain number of females on their boards of directors.

Specifically, under this woman quota, every company must have a minimum of one female director on its board by the end of 2019. By the end of 2021, any company with four or fewer directors must have one female board member, any company with five directors must have two female board members, and any company with six or more directors must have three female board members.

Companies failing to comply face fines of $100,000 for the first offense and $300,000 for any subsequent offense—for each spot not held by a female.

For Creighton Meland, a retired corporate attorney and shareholder of a California-based company, this woman quota will force him to discriminate when voting on board members at the shareholder election. Instead of merely voting for the best candidates, he must consider their sex as well.

This quota violates the Constitution’s Equal Protection guarantee. The government has no interest in outright balancing the workforce based on characteristics like sex.

Nor are such quotas even necessary in the first place. Without any sex-based quotas on the books, women’s representation on the boards of the top U.S. companies has increased for seven consecutive quarters, according to the Equilar Institute’s Gender Diversity Index. Forty percent of new board member positions last quarter went to women. Almost 90% of these 3,000 boards have at least one woman member.

State-mandated quotas not only ignore the steady gains women are making, they will also cast doubt on the future achievements of women. People may question whether female board members are hired on their merits or to fill the quota.

The government should not force people to put a job candidate’s sex above his or her individual traits. Any law that puts equal numbers above equal treatment undermines the very concept of equality.

Represented free of charge by PLF, Creighton has filed a federal lawsuit to stop the state’s efforts to discriminate based on immutable characteristics like sex.

What’s At Stake?

  • Treating people according to immutable characteristics like sex violates the very notion of equality before the law. People should be treated as individuals, not as members of a group they did not choose.
  • The government’s attempt to dictate the percentage of men and women on corporate boards is discriminatory and violates the Constitution’s equal protection guarantee.
  • A government that can meddle with the composition of corporate boards can enlist shareholders to run companies according to the state’s preferred social policies.

Case Timeline

April 13, 2022
March 28, 2022
February 23, 2022
June 21, 2021
July 22, 2020
November 13, 2019