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Posts Tagged ‘gender’

Women On Board

Posted on: October 16th, 2018

By: Rebecca Smith

Nearly one-quarter of California-headquartered publicly held domestic or foreign corporations have no female directors.  No later than the close of the 2019 calendar year, those companies will need to add at least one.  Senate Bill 826 (SB 826) signed by Governor Brown on September 30, 2018 has mandated this change.  And, if the board of directors of a corporation is larger than four board members, the required number of women on the board increases.  If the number of directors is six or more, the corporation must have a minimum of three directors, if the number of directors is five, the corporation shall have a minimum of two directors.  Corporations will be allowed until the close of the 2021 calendar year to add the additional female directors beyond one.

There is a strong likelihood that this new law will be challenged in the courts.  The first argument being made is that the law will displace an existing member of the board of directors solely on the basis of gender.  The new law has attempted to address this by indicating:  “A corporation may increase the number of directors on its board to comply with this section.”  The argument being made is that the law focuses too narrowly on gender instead of other aspects of diversity, including race and sexual orientation.  The government may have to prove not only that there is disparity in board representation among men and women, but also that such a divide is a sufficient reason to create a special law for women.

The other issue in the forefront is to which companies the law will apply.  While the statute provides that the companies will be determined by the location of the principal executive offices according to the corporation’s SEC 10-K form, challenges are being made that the law should not apply to businesses headquartered in California, but incorporated elsewhere.  The new Section 2115.5 of the Corporations Code has attempted to address this issue by indicating that the new requirements shall apply to a foreign corporation that is a publicly held corporation to the exclusion of the law of the jurisdiction in which the foreign corporation is incorporated.  That being said, the “internal affairs doctrine” may provide a basis for the challenge.  The internal affairs doctrine, a choice of law rule in corporation law, provides that the internal affairs of a corporation will be governed by the corporate statutes and case law of the state in which the corporation is incorporated.

So what happens if a company does not comply:  A fine of $100,000 for a first violation, and a fine of $300,000 for a second or subsequent violation.  For purposes of imposing the fine, each director seat required by the section to be held by a female, which is not held by a female during at least a portion of the calendar year is considered a violation.  For the time being, California companies with their principal executive offices in California should start to think about how to comply with the law by the end of 2019 and stay tuned for any changes.

If you have any questions or would like more information, please contact Rebecca Smith at [email protected].

Department of Justice – North Carolina Duel Over Transgender Individuals’ Civil Rights.

Posted on: May 11th, 2016

By: Agne Krutules

On May 9, 2016, the Department of Justice (DOJ) filed a complaint against the State of North Carolina, the University of North Carolina (UNC) and the North Carolina Department of Public Safety (DPS) in the U.S. District Court in Greensboro, North Carolina.  The lawsuit seeks a preliminary injunction to block implementation of House Bill 2 (H.B.2), the North Carolina law passed in March, which requires that people using bathrooms, locker rooms and similar facilities in state and local buildings use the facilities corresponding to the gender listed on their birth certificates.  H.B.2 was prompted by the City of Charlotte’s adoption of an ordinance barring discrimination against gay or transgender individuals and specifically allowing them to use bathrooms and locker rooms that conform to their gender identity.   Thus, the measure also blocks localities from implementing anti-discrimination provisions for lesbian, gay, bisexual and transgender individuals.

The DOJ complaint claims that the North Carolina measure violates Title VII of the Civil Rights Act of 1964 (Title VII), prohibiting discrimination in the workplace, and Title IX (Title IX) of the Education Amendments of 1972, which prohibits discrimination based on gender in schools and school activities, and the Violence Against Women Reauthorization Act of 2013 (VAWA), which prohibits states receiving funding under that law from discriminating based on “sex” or “gender identity.”  The DOJ’s legal action amounts to a counter-suit to the one that Patrick L. McCrory, North Carolina’s Governor, filed earlier on Monday in the U.S. District Court in Raleigh, North Carolina, where he sought injunctive relief to block the DOJ’s demand that the State stop implementing H.B.2, and asked the court to declare that H.B.2 did not violate Title VII or VAWA.

In tandem, these cases create the potential for a future Supreme Court case interpreting whether federal civil rights law provide protections for transgender individuals. Although neither Title VII not Title XI explicitly include protections for transgender individuals and several Circuit Courts have held that Title VII does not outlaw discrimination against transgender persons, the Supreme Court has yet to rule on this issue.  Thus, the implications of such a decision will be significant and one that employers will need to continue to monitor.



New Jersey Imposes Another Posting Requirement on Employers

Posted on: October 5th, 2012

By: Brad Adler

In addition to a record keeping requirement notice, a family leave insurance notice and others, New Jersey employers now will be required to post and distribute to employees a notice of their right to work in an environment free from gender-based pay discrimination.  The new law applies to organizations with 50 or more employees and goes into effect on November 21, 2012, although it remains to be seen whether the New Jersey Department of Labor will have a form notice ready by that time.

When the law does go into effect (and the form is available), covered employers will be required to initially distribute a copy of the notice to all employees within 30 days after the Department of Labor publishes the notice.  Thereafter, an employer must provide the notice to all employees annually or sooner if an employee requests a copy of the notice.