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Is setting a quota for female board members even constitutional?

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A version of this article on woman quotas for corporate boards appeared in the Los Angeles Times

California recently became the first U.S. state to implement a gender quota for Boards of Directors of public companies over a certain size. Massachusetts, Illinois, and New Jersey are likely to soon follow suit.

While gender diversity at the highest corporate levels is a positive development, there’s a high likelihood that these laws will be struck down in court, and that’s a good thing.

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While these quotas would lead to more female corporate board members, they come at the expense of the broader goal of equality, which requires equal dignity for women.

As a lawyer in the late 1970s, future Supreme Court Justice Ruth Bader Ginsburg argued before the Supreme Court that laws intending to help one gender might lead to the reinforcement of outdated stereotypes about that particular group.

She famously challenged an employment-related law that provided widows with death benefits, but gave widowers nothing. Ginsburg noted during oral arguments that the law was designed to help women, but it also assumed that a man, being the primary breadwinner, wouldn’t need help after his wife’s death. With that assumption, the law attributed “status, dignity and importance” to men, while not affording the same to women.

Data says women are already moving up in the corporate world without laws that require “woman quotas.” Gender quota’s like California’s would only undermine this progress being made.

California initiative

A 54% increase worldwide in the share of women on corporate boards has been recorded between 2010 and 2015. Some 20% of the board seats of 500 U.S. corporations in Standard & Poor’s index are now occupied by women.

The legislation does not take into account the gains women have made on the corporate front already. It only implies that companies must hire women, or else. What’s even worse is that the law will increase the likelihood of people wondering if women in corporate leadership roles got to where they are on merit, or just because the company was forced to comply with a “woman quota.”

The Supreme Court has scrutinized legislation with gender classification content meticulously. As stated in the Equal Protection Clause of the 14th Amendment, these kinds of laws must be “substantially related” to an “important government interest.” By that measure, laws that require female board representation probably won’t make the cut.

There is an argument from advocates of “woman quotas” that such laws will have a trickle-down effect. They say that with more women on corporate boards, there will eventually be more management positions for women, as well as more female-friendly policies. However, that’s not what’s happening in countries with quotas already in place.

European laws

Norway requires publicly-traded companies to have 40% of their board seats occupied by women. But since enacting this law in 2008, Norway has yet to see a significant increase in the number of women holding senior managerial posts. The pay gap between men and women hasn’t seen a reduction either. Seven years after the quota’s implementation, there had been no female CEOs in Norway.

France, Germany, and the Netherlands imposed board female quotas ranging from 30% to 40%, but women hold only 10% to 20% of senior management positions in those countries.

There is also a possibility that in industries where companies are forced to hire less experienced women to meet the quota, corporate performance may suffer. For example, after the implementation of Norway’s “woman quota,” several public companies chose to go private and be exempted from the law.

If anything, arbitrary quotas are inefficient tools for remedying discrimination, even in cases where there is clear evidence of it. They also probably don’t measure up to constitutional requirements. The Supreme Court has already ruled that with regards to university admissions, the government cannot use straight quotas to achieve greater diversity.

Former California Gov. Jerry Brown is aware of the legal roadblocks that the state’s “woman quotas” mandate is facing, and recognizes its possibility of being struck down in court. However, Brown insists in a signing statement that the quota is necessary because, as far as female equality is concerned, some people just aren’t “getting the message.”

Woman quotas?

But woman quotas don’t empower women, they simply imply that without the government giving them a leg up, women can’t win corporate board seats.

More often than not, efforts by the government to regulate businesses tend to lead to a multitude of unintended consequences. With “woman quotas,” companies with no history or evidence of discrimination get penalized, and whatever gains women are making without quotas will end up being ignored.

Women don’t need government mandates to attain leadership positions, they are already making excellent progress in that regard. States can do more for gender equality by enacting discrimination-ending measures that are less divisive and constitutional. Enforcement of existing nondiscrimination laws would be an excellent place to start. The same goes for launching public awareness campaigns that expose discriminatory policies.

While states should do everything within their power to remedy discrimination, achieving it by mandating discriminatory policies is not the way to do it, and it doesn't matter who benefits from them.

About The Author

Anastasia Boden is an attorney in Pacific Legal Foundation's Economic Liberty Project, where she challenges anti-competitive licensing laws and laws that restrict freedom of speech.

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