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California Companies Moving to Texas Now Have to Make a Choice

As companies seek states with less regulation, their female employees face more.
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Large companies have been moving their headquarters from places like California, Illinois, and New York to states with more relaxed regulatory regimes for years now.

Elon Musk famously abandoned California for Texas last year when he moved Tesla’s  (TSLA)  headquarters to Austin. 

Oracle  (ORCL)  made the jump as well.

And Silicon Valley stalwart Hewlett Packard Enterprise's  (HPE)  new headquarters near Houston is slated for completion this year.

In addition, Caterpillar  (CAT)  just set plans to move from Illinois to Texas. 

And hedge fund operator Citadel announced this week it’s leaving Chicago for Miami.

The pitch from sunbelt states is an easy one to understand: “It’s cheaper here, we’ll tax you less, we hardly have any snow, and we won’t regulate you like those other states do.”

The Supreme Court’s decision to overturn Roe v. Wade, ending nationwide abortion rights, does throw a new wrinkle into the process of deciding to move, however.

Complete Ban on Abortions in Texas

Texas, which already limits abortions to only the first six weeks of pregnancy, is set to ban abortion completely under a law triggered by the Supreme Court ruling overturning Roe.

As a result, companies that have moved to Texas, or that are considering moving, face the choice of having less regulation on their business in return for accepting more on their female employees and family members.

Many companies are trying to finesse this with pledges to cover transportation expenses for women employees seeking abortion services outside of their new home states.

However, this “solution” opens a slew of problems. 

It involves considerable inconvenience and expense for employees and their companies. It also puts the employees in a situation where they have to share highly personal information with their employer to obtain compensation.

And woe betide anybody who comes up against an HR person who’s opposed to abortion.

Added to that, efforts are being made by some conservatives to penalize corporate compensation for out-of-state abortion expenses.

Republican U.S. Senator Marco Rubio of Florida has proposed legislation to keep companies from writing off such costs for employees and their families. (Curiously enough, Rubio's home state of Florida has more abortions per capita than California.)

Abortion Restrictions Are Only the Beginning

Whether the ongoing shift of companies from liberal states to more conservative ones will eventually shift the political needle in their new homes is a longer term question. 

For now, however, it’s unlikely that overturning Roe v. Wade will have any significant impact on the trend of companies moving to sunbelt states. Only 6.6% of S&P 500 companies have female CEOs and many women oppose abortion as well.

At the same time, the issue of corporate policy in conflict with laws in their new headquarter states isn't going to go away either.

Justice Clarence Thomas explicitly targeted contraception rights and gay marriage in his opinion on Friday, meaning corporations are certain to face more cultural-political challenges ahead.