Official says women on boards law is toothless

LOS ANGELES >> A California official defending the state’s landmark law that mandates women be placed on corporate boards testified Thursday that it was essentially toothless and there are no plans to penalize companies for not complying.

Under the 2018 law, publicly held corporations based in California have to appoint up to three women to their boards of directors by January and could face hefty fines for not doing so or for failing to file the required paperwork.

But Betsy Bogart, a division chief testifying in Los Angeles Superior Court on behalf of her boss, the secretary of state, said the law is not enforced.

“It’s required but there’s no penalty, so it’s essentially voluntary,” Bogart said.

The disclosure came on the second day of trial in a lawsuit by the conservative legal group Judicial Watch that claims it’s 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.

During opening statements Wednesday in Los Angeles Superior Court, a deputy attorney general said the office would not levy fines for not complying with SB826, the Women on Boards law.

“The secretary of state has no plans to draft regulations or implement fines in furtherance of the act,” Deputy Attorney General Ashante Norton said.

Norton defended the law as constitutional and necessary to reverse a culture of discrimination that favors men. She said no additional funding was spent implementing it and the law served a compelling government interest that improved companies bottom lines and the state’s economy.

The law required publicly held companies headquartered in California to have one member who identifies as a woman on their boards of directors by the end of 2019. By January, boards with five directors must have two women and boards with six or more members must have three women.

The law called for penalties ranging from $100,000 fines for failing to report board compositions to the California secretary of state’s office. Companies that do not include the required number of female board members can be fined $100,000 for first violations and $300,000 for subsequent violations.

Bogart said there were no penalties if a company lied about the makeup of its board and there was no follow up if they failed to file the required report.