Employers should keep their eyes on HB 3394, which was passed by the Illinois House of Representatives in late March and is now making its way through the Senate. The bill, introduced by Ancel Glink’s own Chris Welch, would require publicly held corporations (i.e. those listing their stock on a major U.S. stock exchange) operating in the state to have at least one woman and one African-American on its board of directors by December 31, 2020. The bill would allow companies to increase the size of their boards of directors in order to comply.
The bill sets out sizable penalties for employers who fail to comply with its provisions, including penalties of up to $100,000 for a first violation and $300,000 for any subsequent violations. The seats must be held by a woman and an African-American for at least a portion of the year, so if one of these board members left in the middle of the year, the company would not face any penalties.
Whether H.B.3394 will become law is not totally clear, although it does appear to be making its way through the Senate committees, and a vote on it in the Senate some time this year seems likely. The bill easily passed through the House, receiving broad support among Democrats. Since Democrats also have a supermajority in the Senate, it seems likely that it would pass if it were brought to a vote there.
H.B. 3394 would only apply to public corporations. However, it is probably not out of the realm of possibility that it will eventually be expanded to non-public corporations operating in Illinois, assuming there is not too much pushback from employers. Illinois is following the lead of California, which recently passed a similar law that requires publicly traded corporations operating in that state to have at least one female board member by the end of this year. New Jersey also introduced a similar bill last November.
Stay tuned to our blog for updates on the status of the bill. And if you have any question about whether your company needs to comply with it, and, if so, how it might do so, don’t hesitate to contact us.
