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California’s efforts to create more gender diversity on corporate boards were ruled unconstitutional by a Los Angeles Judge. 

The Women on Boards law, known as State Bill 826, called to penalize companies who failed to have the required number of women board members. Superior Court Judge Maureen Duffy-Lewis ruled Friday that the law that required boards to have up to three directors this year would have violated the right to equal treatment. 

Senate President pro-Tempore Toni G. Atkins (D-San Diego), who jointly authored the law with former Senator Hannah Beth Jackson in 2018, said “this disappointing ruling is a reminder that sometimes our legalities don’t match our realities”. 

“More women on corporate boards means better decisions and businesses that outperform the competition – that’s a studied, proven fact. We believe this law remains important—despite the disheartening ruling from the Los Angeles Superior Court—and it exemplifies equal access and opportunity, the very bedrock of our democracy. For those still afraid of women in positions of leadership, they need to work on figuring that out because the world is moving on without them,” Atkins wrote in a statement. 

Under the law, companies are required to place at least one woman on their board by the end of 2019 or face financial penalties. Companies with five directors must have at least two women, and companies with six or more directors to have at least three women by the end of 2021. 

According to Judge Duffy-Lewis’ 23 page-ruling, the state could not prove that the “use of a gender-based classification was necessary to boost California’s economy, improve opportunities for women in the workplace, and protect California taxpayers, public employees, pensions, and retirees.”

The state failed to consider amending existing anti-discrimination laws or putting into effect a new anti-discrimination law focused on the board selection process before Senate Bill 826 was signed into law, Duffy-Lewis wrote.

The law was signed by former Gov. Jerry Brown in 2018. 

Companies that failed to meet the law’s requirements were charged fines f $100,000 for a first violation and $300,000 for a second. According to a chief in the secretary of state's office, no companies were ever fined for violations. 

According to a March report from the Secretary of State’s office, 26 percent of publicly traded companies headquartered in California met the law’s quota. 

Duffy-Lewis’ ruling comes three months after Judicial Watch, a conservative legal group, challenged a measure that mandates corporations diversify their boards with members from certain racial, ethnic, or LGBT groups. The lawsuit argued that the law, Assembly Bill 979 violated the state's constitutional equal protection clause.

A Los Angeles judge ruled the law unconstitutional last month. Signed by Gov. Gavin Newsom in 2020 and was part of the state's efforts to address racial disparities in the workplace. 

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