It’s no secret that California lawmakers have recently made many employment law changes in the last year. Now that these laws are taking effect with the start of 2020, many businesses are now pushing back against them, and how they will impact their businesses.

In November of 2019, yet another company engaged in a lawsuit against the State of California, inciting a discussion over gender in the workplace and whether or not a new law is constitutional.

THE LAW REQUIRES FEMALE BOARD MEMBERS ON COMPANY BOARDS

Senate Bill 826 passed in 2018, required the boards of public companies based in California to have at least one woman as a company board member by the end of 2019. That quota would increase by the end of 2021. Companies would have to meet these quotas by either filling a vacant seat on the board or creating a new one.

The goal of the law is to increase the representation of women and minorities in the workplace – particularly in executive positions. California is the only state to have a law like this on the books.

According to Forbes, companies who do not comply with this law would face penalties including:

  • A $100,000 fine for the first violation; and
  • A $300,000 fine for each following violation.

Moreover, this law could open up businesses to costly and damaging discrimination claims.

CALIFORNIA COMPANY SUING THE STATE OVER THE LAW

According to The Washington Post, one shareholder of OSI Systems Inc. is suing California because of this law. Regarding the lawsuit, plaintiff Creighton Meland claims that the law:

  • Unfairly assumes the company is discriminating against potential board members;
  • Is unconstitutional, since it forces the company to consider gender when hiring, which would be discrimination; and
  • It will generally harm women more than help them.

This case is still pending and others are popping-up. Although Baker & Associates is not involved in any of these cases, the pushback against this law could significantly impact businesses across California.

Therefore, businesses must be aware of how this law, and the cases its generating, could affect them. Companies must be aware of these issues in the working world to avoid complex litigation or penalties.