California’s efforts to get more women on company boards are toothless, patronising and quite possibly illegal

I often think of California as the home of the contemporary American Dream. From the Gold Rush to Google, Hollywood to hippy culture and "Arnie" to Apple; if any place in the US has the chutzpah to catapult us into the future – technologically, culturally or socially – America’s most populous state (whose motto, by the way, is “Eureka”) is it.

California is arguably the capital of liberal America. Earlier this year, laws were introduced allowing licensed dispensaries to sell recreational marijuana to anyone aged 21 and over. Local law enforcement officials are (under most circumstances) not allowed to cooperate with the federal Immigration and Customs Enforcement agency on deportation cases. Unlike in other states, officers are not allowed to ask about a person’s immigration status.

In the workplace, most Californian employers must provide up to 12 weeks of unpaid, job-protected parental leave. The state’s minimum wage, at $11 an hour for companies employing more than 26 people, is also a fair bit higher than elsewhere. If you consider yourself to be “progressive”, California’s probably not an awful place to live.

So it came as no surprise to me that the Golden State late last month passed a law forcing every company listed on the stock exchange and based in California to have at least one woman on its board by the end of next year, and – depending on its size – up to three women by 2021.

If you’ve read my recent ramblings on workplace culture, you will know that I applaud all progress – great or small – towards increased gender diversity, especially at the decision-making level of the world’s biggest companies. But as I studied the case of (surely well-intentioned) California more, my enthusiasm faded. What the state is doing may, at best, force a small subset of firms to tweak the make-up of their boards – in most cases marginally. At worst, the move will be deemed unconstitutional and end up hamstringing – potentially even reversing – noble efforts to bring about meaningful change.

Let's start with the latter scenario. As The New York Times’ Andrew Ross Sorkin astutely explains in a column, the State Legislature itself acknowledges the problems. In its analysis it admits that the bill is likely to be challenged on equal protection grounds. The fact that it enforces a quota may well be deemed unlawful. Employers, under both the US and Californian constitution, are not allowed to hire people on the basis of gender.

Governor Jerry Brown, who signed the law, also admits that “serious legal concerns” have already been raised. He even accepts that “potential flaws” might indeed “prove fatal to its ultimate implementation”. But, he says, “recent events in Washington DC – and beyond – make it crystal clear that many are not getting the message.”

“Given all the special privileges that corporations have enjoyed for so long, it’s high time corporate boards include the people who constitute more than half the ‘persons’ in America,” he goes on. A round of applause for Brown’s intentions here please, but unfortunately the law famously is, well, the law.

Even legal matters aside though, the bill – just like our government's shared parental leave policy, which was meant to supercharge efforts to shrink the yawning UK gender pay gap but has actually achieved virtually nothing – has a good chance of proving toothless.

A Bloomberg analysis shows that across the largest companies in the state, all but one already comply with it.

Because the vast majority of large publicly traded companies based in California are chartered in other states, there's actually a chance that they won’t have to abide by the law at all. A company must follow the laws of the state in which it is incorporated. For several reasons many companies are incorporated in the state of Delaware, for example. Based on one estimate, the only major corporations affected by the new law would therefore be Apple. And guess what? Apple already has two women on its board of eight. All it would have to do between now and the end of 2021 is add one more. Will that really move the needle?

Of course there are other fundamental reasons to be critical of the bill. Might it inspire companies to hire “token” women just to comply with the letter of the law? Quite possibly. Could it fuel a frenzied box-ticking exercise and accusations of positive bias at an already fraught time for HR departments? I'd hate to think so, but it's possible. A 2011 study done by academics at the University of Michigan demonstrated that corporate performance tends to deteriorate after quotas are imposed, likely because newly appointed board members lack necessary experience.

One of California's brightest corporate stars, Google parent Alphabet, has a semi-secret research and development facility called X. X's self-stated mission is to invent and launch so-called “moonshot” projects that aim to make the world a radically better place. These projects are all incredibly ambitious and in many cases decidedly unlikely to amount to anything. Perhaps California's lawmakers have spent too much time gazing dewy-eyed at Silicon Valley for inspiration.

Moonshot projects are admirable, but let's get the basics right first. Stick to the law. Support ambitious women and ethnic minorities from the very start of their careers, but don’t mandate controversial quotas that create friction and might even be considered patronising.

Board members should be chosen based on merit, and merit alone. Male, female, young, old, black, white, gay, straight, blind or deaf. Diversity is going to take time, but even without quotas we can get there. Eventually.