Sarah’s initial application for WBE certification went smoothly. Phew! She had heard nightmares about the process. She worried about the regulators presuming that she didn’t have what it takes to run the business. She worried about the caprices of certification officers, their biases and subjectivity. She worried about the perception that she didn’t have the necessary technical ability or education—Sarah worried about a lot of things, like most conscientious business owners.
But they accepted and approved her WBE application quickly, had a brief and pleasant exit interview, and sent her on her way—like they wanted to check a box and add her business to the column of newly minted WBEs. As if increasing the ranks of certified MWBEs and DBEs was part of some political agenda. Nah, it couldn’t be…
Since then, over the past couple of years, Sarah has been successful. Now it’s time to apply for re-certification. Little does Sarah know, her nightmare has just begun. All of the monsters of this process that worried Sarah the first go ‘round have returned to rear their ugly heads.
She is summoned to the office of the Big Bad government official in charge of re-certs and interrogated for two and a half hours. Most of the questions imply that the certification folks believe she is not really in control of her company, that she is a figurehead, that her father, or brother, or husband, or male partner (as the case may be) is calling the shots behind closed doors. Can you imagine if the situation were reversed? Can you imagine if a man had to suffer through such humiliating cross-examination?
To the man: “Isn’t your mother the one really in control of the business? Doesn’t she own the building where your business is located? Doesn’t she have the technical expertise? She hires and fires the employees and makes all the business decisions day-to-day, right? Isn’t it true that she, and not you, puts her credit at risk, signs contracts and checks?
Man to Interrogating Certification Officer: “She helps me with the office work, but that’s only because I have to be in the field supervising the work.”
Doesn’t this sound ridiculous? Well, why doesn’t the reverse sound just as ridiculous, when a woman is running the business, doing what most business owners spend most of their time doing—office work—while their father or brother, or husband, or male partner (as the case may be), is supervising work in the field?
I’ll tell you why, because there is an inherent bias in some of us, a prejudice, if you will, that says a woman isn’t capable of doing certain things on her own, especially when those things are roles traditionally reserved for men—like running a contracting company.
So here’s where it gets tricky/sticky. “Control” is a slippery legal concept. It’s hard to prove or disprove. The regulations that govern DBE and WBE certifications consider a host of different factors in determining whether a woman or minority is really in “control,” for the purpose of running her business. The control has to be on paper—laid out in the corporate books and records—and the control has to be real and continuing—you must have both.
In order to give oneself control on paper, in the corporate by-laws, for example, a basic understanding of corporate law is necessary. Most by-laws are structured in a way that makes the “president” the officer with the ultimate authority to manage affairs of the business, but you would be surprised by how many woman get themselves into trouble by making someone else the “president,” and making themselves Chief Executive Office (CEO). Maybe because one sees the title “CEO” bandied about among the scions of publicly traded fortune 500 companies, one thinks erroneously that the “CEO” is the company officer with all the authority. But generally, in the bylaws of small, private, closely held (opposite of publicly traded) companies, the CEO is not a recognized officer of the corporation.
Here’s a laundry list of documents expressly mentioned in the New York regulations that better not be written in a way that restricts the woman-owner’s authority to make all decisions pertaining to the operation of her business: articles of incorporation, corporate bylaws, partnership agreements and other agreements including, but not limited to, loan agreements, lease agreements, supply agreements, credit agreements or other agreements.
The regulations also say that women owners must demonstrate control of negotiations, signature authority for payroll, leases, letters of credit, insurance bonds, banking services and contracts, and other business transactions through production of relevant documents.
If Sarah all of these documents will be in order when she provides them to the Big Bad Certification officer. If they’re not, she may be in for a fight to keep her WBE certification
Coming up next… more about control.