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A new California law, if passed, could force companies like Facebook, Tesla and Alphabet to add more women to their boards

It’s up to Governor Jerry Brown.

California State Senator Hannah-Beth Jackson
California State Senator Hannah-Beth Jackson co-authored the bill.
Mike Windle/Getty Images for Weinstein Carnegie Philanthropic Group

A new bill in California — the first of its kind in the U.S. — could force major companies, including many household-name tech firms, to bring more women to the boardroom.

Bill SB-826, which passed California’s state congress a few weeks ago and is now on Governor Jerry Brown’s desk, would require all public companies with principal executive offices in the state to have a minimum number of women on their boards — proportionate to the total number of board members — within the next few years.

For some major tech companies, including Alphabet, Facebook, Intel, Snap, Apple, Tesla and Yelp, this means that they’ll have to add at least one more female board member by 2021 to meet the bill’s quota. It requires boards with five members to have at least two women, and boards with six or more members to include at least three.

The bill comes amid growing criticism of the lack of gender diversity in tech and other industries, where at publicly traded companies in the past five years the percentage of women on boards has only seen single-digit growth, according to data from executive research firm Equilar.

“The glass ceiling in the C-suite is notorious, and this bill calls upon companies to open up their board rooms,” state Sen. Hannah-Beth Jackson, a Democrat who co-authored the bill, told Recode. Jackson sponsored a non-binding resolution urging companies to add more women to their boards back in 2013, but says most companies ignored the request and “have really not moved the needle at all” on the issue.

If companies are found breaking the rule, they will be fined $100,000 initially and $300,000 for subsequent violations. That’s not enough to make a dent in the pocketbook of a company like Alphabet, but it is likely to make a statement.

“By bringing more public consciousness to this, we hope we can put a little more pressure on these companies to comply,” Jackson said.

Most household-name tech companies are nowhere near having equal representation of women on their boards. Of the 13 Recode researched, HP had the highest share of female board members at 40 percent, or four out of 10 board members, followed by Twitter at 36 percent. Alphabet had the lowest share with less than 20 percent, or two out of 11 board members.

The bill could affect companies like Airbnb and Slack as well, which are expected to go public soon. Although Airbnb just added its first woman, Ann Mather, to its board in August, it still has two fewer women than what the new rules would require.

Recode reached out to several major tech companies for their positions on the bill. Alphabet declined to comment directly on the legislation but referred to a previous statement Board Chairman John Hennessy made about company efforts to recruit a diverse board. Salesforce, Snap, Airbnb, Intel, Slack and Yelp declined to comment and Facebook and Tesla did not respond.

While all of these high-profile tech companies are far from gender parity on their boards, they still rate better than the tech industry as a whole, which includes many lesser-known hardware manufacturers and enterprise software companies.

Just 16 percent of board members on tech companies in the Russell 3000 — a grouping of the 3,000 biggest publicly traded tech companies in the U.S. — are women, according to June 30 data from Equilar. The average across all industries — not just tech — is only slightly better, with 18 percent women board members.

Overall, that share has grown from 12 percent of board seats filled by women in 2013, according to Equilar. But to advocates who want to see these numbers rise to 50 percent or more in the next few years, that growth is too slow.

Tech investor and diversity advocate Freada Kapor Klein said she worries that if the bill passes, women who are placed on boards might be considered “diversity hires” or “quota hires” and that their real contributions could be minimized.

“Like so many other initiatives, this bill is well intentioned, but it is going to have negative unintended consequences,” she told Recode. “That being said, I think that if you have a critical mass [of women], you actually do change culture.”

Studies have shown that having several women on a board can shift power dynamics so that women feel less isolated and ignored by their male peers.

Some critics of the bill, such as the California Chamber of Commerce, have argued that the bill leaves out requirements around other aspects of diversity, such as race and sexual orientation.

Sen. Jackson called that argument a red herring.

“There are a number of eminently qualified women of color — the notion that we are not considering diversity is almost an insult to women of color,” Jackson said.

The fate of the bill is now in Gov. Brown’s hands, who will have until the end of the month to decide whether or not to sign it into law.

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