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California Law Pushes Virtue of Diversity Requiring Females on Boards of Directors

California Governor Jerry Brown recently signed Senate Bill 826 into law which requires publicly-held corporations with principal executive offices in California to have a certain number of females on their boards of directors.

The new law sets forth phased requirements for these corporations. By the end of 2019, each covered company must have at least one female director. By the end of 2021, this number increases to three female directors if the company has six or more directors in total. (For boards with five or fewer directors, the numbers decrease.)

If companies fail to comply with the new law, the California Secretary of State is authorized to impose significant penalties: $100,000 for a first-time violation, and $300,000 for subsequent violations.

The bill highlights the underrepresentation of women on boards of directors, identifying that “[o]ne-fourth of California’s public companies in the Russell 3000 index have NO women on their boards of directors; and for the rest of the companies, women hold only 15.5 percent of the board seats.” The bill lists economic advantages to having female directors and cites a study which “found that companies with more women on their boards are more likely to ‘create a sustainable future’ by, among other things, instituting strong governance structures with a high level of transparency.”

In connection with the new law, Governor Brown recognized objections, but stated that “…recent events in Washington, D.C.–and beyond–make it crystal clear that many are not getting the message” and “[g]iven all the special privileges that corporations have enjoyed for so long, it’s high time corporate boards include the people who constitute more than half the ‘persons’ in America.”

Jackson Lewis P.C. © 2019

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Richard J. Cino, Jackson Lewis, Corporate Governance Attorney, Contract Breach Lawyer
Office Managing Principal

Richard J. Cino is the Office Managing Principal of the Morristown and Monmouth County, New Jersey, offices of Jackson Lewis P.C. He is also Co-Leader of the Corporate Governance and Internal Investigations Practice Group.

Mr. Cino has a broad area of practice and responsibility with the firm. He acts as lead counsel on all aspects of employment litigation, including defending claims of whistleblowers under various state and federal laws including the Sarbanes-Oxley Act, sexual harassment, all types of discrimination,...

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Susan E. Groff, Jackson Lewis, disability accommodation lawyer, protected absence attorney
Principal

Susan E. Groff is a Principal in the Los Angeles, California, office of Jackson Lewis P.C. She advises and counsels management on various employment related issues.

Ms. Groff advises employers on complying with federal and California requirements for disability accommodation and protected leaves of absence.

In addition, Ms. Groff counsels employers on a host of other employment issues, including wage and hour laws, harassment and discrimination complaints, workplace investigations, reductions in force, and discipline and termination questions. She also conducts training seminars on employment related issues, including sexual harassment prevention training.

213-689-0404
Alyssa M. Toft, Jackson Lewis, labor and employment lawyer
Principle

Alyssa M. Toft is a Principal in the Minneapolis, Minnesota office of Jackson Lewis P.C. She defends employers in single and multi-plaintiff actions in state and federal court, including cases involving claims of discrimination, retaliation, harassment, whistleblowing, hostile work environment, defamation, and drug testing violations.

Ms. Toft also represents clients in non-competition, non-solicitation, and trade secrets lawsuits. She litigates cases at the appellate level and has served as an adjunct professor for an appellate legal writing...

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