California Legislators who Voted to Discriminate Against Transgender Individuals Should Really Take off Their "Trans People Belong" Pins

Why California Corporation Code Section 301.3 Impermissibly Discriminates Against Transgender Individuals on the Basis of Gender Identity

In honor of Trans Visibility Week, the California State Legislature recognized the first annual Trans Day of Visibility on Monday. I will honor Trans Visibility Week by discussing a California law that impermissibly discriminates against transgender men, intersex individuals, and other biological females who do not personally identify as their birth sex on the basis of their gender identity, California Corporations Code § 301.3 (“Section 301.3”).¹

Curiously, many California State Legislators who sported “Trans People Belong” pins on Monday voted for Section 301.3, perhaps demonstrating the epitome of virtue signaling and hypocrisy.

Section 301.3

Before being held unconstitutional in 2022, Section 301.3 required that every board of a publicly held corporation, with its principal executive offices located in California, have at least one woman on its board of directors by the close of 2019.² This law defines a “publicly held corporation” as “a corporation with outstanding shares listed on a major United States stock exchange.”³ Further, by the end of 2021, the board of every publicly held corporation was required to have the following numbers of women on its corporate boards:

1. If the corporate board consisted of six (6) or more members, a minimum of three (3) had to be women.⁴

2. If the corporate board consisted of five (5) members, a minimum of two (2) had to be women.⁵

3. If the corporate board consisted of four (4) or fewer members, a minimum of one (1) had to be a woman.⁶

Section 301.3 also authorized the Secretary of State to issue fines of $100,000.00 for failing to submit paperwork proving compliance with the law, $100,000.00 for a first violation, and $300,000.00 for each additional violation.⁷ Each corporate board seat not filled by a woman as required would count as its own individual violation.⁸

To answer the questions of J.K. Rowling and Senator Marsha Blackburn, for purposes of counting women on corporate boards, transgender biological men who “self-identify” as women qualify as women, “without regard to the individual’s designated sex at birth.”⁹ No exception is made for biological women who self-identify as transgender men, gender non-binary, gender fluid, or agender.¹⁰ No provision is made for biologically female intersex individuals who do not self-identify as women.

Section 301.3 clearly discriminates on the basis of sex. Accordingly, it violates Article I, Section 7 of the California Constitution and is currently enjoined pending appeal.¹¹ Although the lower court did not evaluate the argument, it may very well violate Article I, Section 31 of the California Constitution.¹²

However, it is important to recognize that Section 301.3 not only impermissibly discriminates on the basis of sex, it is also impermissibly discriminates on the basis of gender identity, discriminating against transgender men, intersex individuals, and other biological women who do not personally identify with the gender that was their birth sex (“Transgender Individuals”).¹³

Constitutionally Impermissible Discrimination

Article I, Section 7 of the California Constitution provides “A person may not be deprived of life, liberty, or property without due process of law or denied equal protection of the laws.”¹⁴ It also provides that “A citizen or class of citizens may not be granted privileges or immunities not granted on the same terms to all citizens.”¹⁵

“The concept of the equal protection of the laws compels recognition of the proposition that persons similarly situated with respect to the legitimate purpose of the law receive like treatment.”¹⁶ This constitutional provision applies to sexual orientation discrimination and gender identity discrimination.¹⁷

“To “discriminate against” a person . . .” means “treating that individual worse than others who are similarly situated.”¹⁸ The California Supreme Court has defined the term “discriminate” as “to make distinctions in treatment” or “show partiality (in favor of) or prejudice (against”) and the term “preferential” as “‘giving preference’, which is ‘a giving of priority or advantage to one person . . . over others.’”¹⁹ Discrimination is not legally defined by the party who is discriminated against or who formally does the discrimination.²⁰

Section 301.3 discriminates on the basis of gender identity among biologically born women. Non-Transgender Women, who self-identify as their sex assigned at birth, are eligible to fill all of the corporate board seats of a publicly held corporation and have anywhere from 25% to 50% of all corporate board seats reserved to only themselves.

Non-Transgender Women do not have to deny their gender identity in order to be eligible for any seat on a corporate board of a publicly held corporation. Non-Transgender Women have anywhere from one to three corporate board seats automatically reserved simply due to their self-identification as women.

However, Transgender Individuals, who do not self-identify as their sex assigned at birth, are not eligible for all corporate board seats and are instead limited to only 50%-75% of all seats on a corporate board. The only way for Transgender Individuals to become eligible would be to deny their gender identity. In other words, among biological women, Section 301.3 discriminates against Transgender Individuals in favor of Non-Transgender Women on the basis of their gender identity.²¹

How might this work in a real life situation?

Let us suppose a corporate board of a publicly held corporation composed of six (6) members has one (1) open position they seek to fill. The corporate board is currently comprised of two (2) Non-Transgender Women and three (3) Non-Transgender men.

The two finalists for the corporate board opening are novelist J.K. Rowling (a well-known Non-Transgender Woman) and adult film star and adult sex toy manufacturer Buck Angel (a well-known Transgender Man). After reviewing their proposed resumes, the publicly held corporation decides that Mr. Angel is better qualified than Ms. Rowling for the seat on their board.

Under Section 301.3, even though Mr. Angel is considered better qualified, the publicly held corporation must hire Ms. Rowling to the board seat. Why? Because she self-identifies as a woman and Mr. Angel does not self-identify as a woman. The only way in which Mr. Angel would be hired is if he denied and disclaimed his gender identity as a transman and claimed to be a woman. While Mr. Angel, a longtime activist for LGBTQIA civil rights, is very clear that he is biologically female, he does not self-identify as a woman. The law thus discriminates on the basis of gender identity.

One might ask, what if the publicly held corporation in this situation decides to not consider Ms. Rowling but instead considers another transgender woman, say prominent commentator and YouTube star, Blaire White. After reviewing their respective resumes, the publicly held corporation still determines that Mr. Angel is better qualified than Ms. White. Section 301.3 requires the publicly held corporation to hire Ms. White over Mr. Angel.

In this situation, the publicly held corporation has hired one transgender individual (Blair White is biologically male but self-identifies as a woman) over another transgender individual. Would this mean it is no longer a case of government ordered gender identity discrimination?

According to the United States Supreme Court, the answer is no.²²

It is still gender identity discrimination if one’s gender identity factored into the decision even if the decision benefits one transgender individual over another transgender individual.²³ In this situation, Mr. Angel is considered better qualified than Ms. White but because Mr. Angel self-identifies as a man, he is still discriminated against for being a transgender man on the basis of gender identity.²⁴

Section 301.3 further discriminates on the basis of gender identity by ordering that gender identity self-identification be a factor for selection as a corporate board member, invoking the status of gender identity for selection to a seat.²⁵ A corporate board member of a publicly held corporation is not free to solely focus on doing their job but instead must concern themselves with their gender identity. A biological woman on the board who realizes she is transgender may fear being kicked off of the board for discovering and recognizing his true identity and deciding to transition.

A transgender woman on the board of a publicly held corporation who realizes she is not actually transgender and wishes to detransition to her birth sex may fear being kicked off the corporate board for coming to the realization that he is not actually transgender.

A gender non-binary, gender fluid, or agender individual who serves on a corporate board must decide a gender for purposes of legal compliance, no longer free to decide which gender they individually feel. Thus, by mandating that gender identity as a decisive differential factor in the hiring of a corporate board member, Section 301.3 constitutes gender identity discrimination in and of itself.²⁶

Now, one might argue that Section 301.3 does not discriminate because Transgender Individuals could simply identify themselves as women in order to be eligible for selection to a corporate board. Legally, this is irrelevant as no transgender individual can be forced to deny their gender identity in order to avoid discriminatory treatment.²⁷

Moreover, it is not sufficient to say that a law is not discriminatory simply because it relies upon conduct (self-identifying to the public as transgender) instead of actual status as conduct and status are legally indistinguishable for purposes of addressing sexual orientation and gender identity discrimination.²⁸

Further, it is discriminatory itself to require that any Transgender Individual out themselves as having been assigned female at birth, especially if that individual does not wish to reveal that fact to his work and business colleagues.²⁹ It should be noted that no court has ever held that the state has a rational basis, let alone a compelling governmental interest, in encouraging LGBTQIA individuals to publicly identify their sexual orientation and gender identity.³⁰

One might also argue that Section 301.3’s discrimination is ameliorated because of the enactment of California Corporation Code Section 301.4 ("Section 301.4"), which mandates the selection of at least one "underrepresented minority" to a corporate board of a publicly traded company.³¹

Section 301.4, in different litigation, has also been held unconstitutional under Article I, Section 7 of the California Constitution and is currently enjoined. Moreover, unlike Section 301.3, the state is not appealing that ruling, making Section 301.4 a dead letter law. An unconstitutional law like Section 301.4 cannot be used to save the constitutionality of another challenged law, Section 301.3.³²

But the argument fails for many additional reasons. First, Section 301.4 only mandated the presence of an “under-represented minority” on a corporate board, the definition includes a transgender person but does not require the actual inclusion of a Transgender Individual on a corporate board.

Section 301.4 defined a “Director from an underrepresented community” as “an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.”³³ Thus, a publicly held corporation that hired Rachel Dolezal (who self-identifies as black or African American) to its corporate board would have fulfilled the Section 301.4 requirement for having one “underrepresented minority”.

Back to the hypothetical corporate board that is choosing between J.K. Rowling and Buck Angel for a corporate vacancy. If the corporate board has already hired an “underrepresented minority” (like Rachel Dolezal or Jessica Krug) in compliance with Section 301.4, and the choice is solely between a Non-Transgender Woman and a Transgender Individual, the Transgender Individual will be discriminated against in favor of the Non-Transgender Woman.

There is no saving catchall provision that allows the publicly held corporation in this instance to hire the better qualified transgender man, Mr. Angel, over the lesser qualified Non-Transgender Woman, Ms. Rowling. Nor does any court have the authority to write one in.³⁴

Second, the fact that a different law may treat Transgender Individuals better than Non-Transgender Women in other circumstances does not mean that a discriminatory practice against a Transgender Individual and in favor of a Non-Transgender Woman is no longer discrimination.³⁵ A law’s unconstitutional discrimination is not saved by the fact that it also discriminates in the other direction.³⁶

Finally, one might argue that Section 301.3 doesn’t discriminate on the basis of gender identity because that wasn’t the intent behind the law. Legally, that’s irrelevant for determining whether Section 301.3 impermissibly discriminates as it does so on its face.³⁷

Is Section 301.3 unconstitutional? Almost certainly. Whenever the government discriminates on the basis of sexual orientation and gender identity, its decision faces the strictest scrutiny of the courts.³⁸ Only if the government proves that it (1) has a compelling governmental interest, (2) uses gender identity in a way narrowly tailored to that compelling governmental interest, and (3) has absolutely no other alternatives available to it, may the government discriminate on the basis of gender identity.³⁹

A law that discriminates on its face against Transgender Individuals in the basis of hiring for corporate board directors on a publicly held corporation is almost certainly unconstitutional.⁴⁰ There is no compelling governmental interest in limiting the number of potential board seats of a publicly held corporation that Transgender Individuals can be hired to.⁴¹ It is simply discrimination for the sake of discrimination, which on the basis of a suspect classification is prohibited under all circumstances.⁴²

Discriminatory laws like this have no place in America, let alone in California.⁴³ Claiming to support transgender people and transgender rights is inconsistent with voting in favor of laws that discriminate against Transgender Individuals, like Section 301.3. California State Legislators who voted for this impermissibly discriminatory law ought to take off their pins claiming “Trans People Belong” during Transgender Visibility Week. They don’t actually mean it.

1. The author of this article is an attorney licensed to practice in the State of California and the District of Columbia. This article and all of the works on this Substack page are statements of the opinions of the author, only, and do not constitute legal advice; they are not intended to be relied upon by any individual or entity in any transaction or other legal matter, past, pending, or future. A paid subscription to this Substack page supports the author’s scholarship and provides access to research that the author has compiled, but does not establish an attorney-client relationship. The author does not accept unsolicited requests for legal advice or representation, and this Substack page is not intended as legal advertising. The opinions expressed on this Substack page reflect the personal views of the author only.

2. Cal. Corp. Code § 301.3(a).

3. Cal. Corp. Code § 301.3(f)(2).

4. Cal. Corp. Code § 301.3(b)(1).

5. Cal. Corp. Code § 301.3(b)(2).

6. Cal. Corp. Code § 301.3(b)(3).

7. Cal. Corp. Code § 301.3(e)(1).

8. Cal. Corp. Code § 301.3(e)(2).

9. Cal. Corp. Code § 301.3(f)(1).

10. For simplicity of explanation and to avoid confusion, I will refer to biological women who identify as their birth sex as “Non-Transgender Women”. I will refer to biological women who are (1) transgender men, (2) intersex born with both male and female sex organs but otherwise biologically female, and (3) identify as gender non-binary, gender fluid, or agender collectively as “Transgender Individuals”.

11. As Secretary of State, Senator Alex Padilla refused to enforce the law on the grounds that it was clearly unconstitutional. Those who are appealling the decision to uphold Section 301.3 would set back the cause of women’s rights and gender equality if they were successful at persuading a higher court to reverse over a half century of California law.