(Bloomberg) — A new bill in the New Jersey legislature would require many public companies based in the state to have at least three women on the board by 2021. The measure is the first to mimic a California law signed in September and signals the potential for more states to follow.
Both the California law and New Jersey’s proposal call for public companies domiciled in the state to have at least one female director by 2019. Those with more than five directors are supposed to have three women by 2021.
“Many times with legislation, timing is everything,” said Assemblywoman Nancy Pinkin, a Democrat from Edison. “I think this is a time that things are resonating.”
As of today, 42 percent of New Jersey companies would have to change the composition of their boards, allocating as many as 132 seats to women, according to estimates by advocacy organization 2020 Women on Boards. The law in California, which is home to four times as many companies as New Jersey, could open up as many as 711 director roles for women.
The New Jersey Chamber of Commerce is opposing the measure, as the California business lobby did in that state. “There’s no place for state legislatures to be involved in corporate governance,” said New Jersey Chamber president Tom Bracken. “To mandate this in New Jersey just makes the state less competitive than it already is.”
Now that California’s law is on the books, though, the California Chamber doesn’t have plans to sue to block it, a spokeswoman for the group said. Nor is the organization aware of any other constitutional challenges, which Governor Jerry Brown had said was his chief concern.
“There’s definitely an equal protection question,” said Nicole Crum, a partner at Washington law firm Sullivan & Worcester. “But it’s hard to imagine a company coming out and litigating on this just from a public relations standpoint. For a lot of companies, it would be great for them to have the opportunity to buy into this if they are looking to add women anyway, which a lot of people are.”
Massachusetts, Illinois, Pennsylvania and Colorado have passed non-binding resolutions in the last several years encouraging companies to diversify their boards, according to an analysis by the National Conference of State Legislatures.
These kinds of quotas and benchmarks have been unpopular in the U.S., where women make up half the workforce and less than a quarter of directors. They’ve achieved their goals in Europe, though, where women make up a third of directors in several countries.
— With assistance from Stacie Sherman, Bloomberg.