In recent years, much attention has been given to the use of legally mandated quotas to achieve greater racial and gender equality in the leadership ranks of business and professional organizations. At first glance, such quotas appear to offer a quick and effective path to equality. After all, nine European countries have successfully used gender quotas to increase leadership diversity in their national companies. For example, corporations headquartered in France, Norway, Sweden, and Italy now have more than 35 percent women on their boards, and in France, where corporations are subject to the strictest quotas, nearly 45 percent of board members are women. In May, the European Union proposed requiring most corporations based in EU member states to have at least 40% women as non-executive directors, or at least 33% women among all directors.
In the United States, the best-known effort to impose legally mandated diversity quotas on private companies is California’s 2018 law requiring all public companies with their principal executive offices in California to have at least one female director; two if the company has five directors; and three if the company has six or more members of the board of directors (the “Gender Mandate”). In 2020, California went a step further and required California-based public companies to have at least one board member who identifies as a racial or ethnic minority or as gay, lesbian, bisexual, or transgender (the “Diversity Mandate”). “).
However, unlike in Europe, in the United States, the federal constitution and the constitutions of many states make the legality of such mandatory quotas highly questionable. This is because these constitutions have equal protection provisions that guarantee that no one will be treated differently from others because of their gender, race, ethnicity, or other fundamental characteristics. As the US Supreme Court ruled more than 40 years ago, “it is too late to argue that the guarantee of equal protection for all persons permits the recognition of persons under special guardianship entitled to a higher degree of protection than the one given to others”.
In light of the equal protection guarantee in the California constitution, it is therefore not surprising that the Diversity Mandate was declared invalid in April 2022 in a motion for summary judgment. And, a month later, in May 2022, the Gender Mandate was also found to violate California’s constitutional guarantee of equal protection. As I write this article, a federal lawsuit challenging the Gender Mandate under the equal protection clause of the United States Constitution is still pending.
In the state’s challenge to the Gender Mandate, a California Superior Court judge ruled that any classification that affects two or more “similarly situated groups” unequally is constitutionally suspect and that “men and women are similar to the effects of [the] gender-based quota. California, therefore, was required to show that it had a “compelling state interest” in adopting the Gender Mandate. The judge found, however, that the clear purpose of the law was “gender balance, not a compelling state interest, and not to remedy discrimination, which it is. In fact, the court found no evidence of “any specific, deliberate, intentional and unlawful discrimination in the process.” Therefore, the court ruled that California had no compelling governmental interest that would justify the state’s intervention in the board selection process. As a result, the judge declared that the Gender Mandate violates the equal protection clause of the California constitution.
Thus, despite the success of mandatory gender quotas in Europe, in the United States, the legal implementation of diversity quotas of any kind is likely to be considered unconstitutional. Therefore, we are forced to recognize that government-mandated diversity quotas cannot provide a quick or effective solution to racial and gender inequality in leadership in business and professional organizations. There is simply no evidence that such inequality is the result of deliberate and intentional discrimination in the decision-making practices of these organizations, whether it be in the hiring, promotion, compensation, or selection of board members. We need to forget about government-mandated quotas and focus on changing the structures, processes, and practices of companies that consistently and predictably lead to systemic racial and gender inequality in our workplaces. It’s time we got down to business to make the changes to company systems that will begin to create more equality in the workplace.