New California law will require more diversity in corporate boardrooms

A new bill was signed into law on Wednesday in California that will require more diversity within corporate boards of executives.

The law, AB 979, comes as renewed Black Lives Matter protests highlight the socioeconomic gaps and marginalization Black Americans endure as compared to their white counterparts.

The Los Angeles Times reports that Gov. Gavin Newsom (D) signed the bill in an online ceremony, and noted that the law is vital to increasing diversity in company employment.


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About 625 publicly held corporations located in California will be subject to the law, and must include at least one person from a minority or underrepresented background by the end of 2022. 

By the end of 2021, the same publicly traded companies headquartered in California must have one director from an underrepresented background. 

Boards with membership between four to nine members must have at least two people from underrepresented backgrounds, whole executive boards with over nine members must have at least three minority board members. 

More appointments are required over the years the company is still in business.  

“When we talk about racial justice, we talk about empowerment, we talk about power, we need to talk about seats at the table,” Newsom said.

The Times notes that the law is likely to be challenged in court by some groups, particularly in regards to the “quota” the law establishes.

“It’s a quota, and quotas are unconstitutional,” Thomas Fitton, president of Judicial Watch, told reporters. In 2028, Fitton and his organization sued the state after passing a similar law mandating a certain number of women be on executive boards.

Fitton said his organization is reviewing the new law before deciding whether to go to court.

“We are deeply concerned about the new legislation,” he told reporters. “It’s a violation of the equal protection clause of the U.S. Constitution. It undermines the core legal concept of equal protection.”


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Conversely, legal experts say that the new bill isn’t in any legal danger, citing Assembly Bill 979, publicly held corporations headquartered in California are required to have at least one director from an underrepresented community by the close of 2021.

An underrepresented group here is defined as identifying as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native.

Sexual orientation is also taken into account, including self-identifying gay, lesbian, bisexual or transgender individuals.

Current statistics on executive board diversity are bleak; a study from the Harvard Law School Forum of Corporate Governance found that 80.7 percent of board seats of Fortune 500 companies are occupied by white people, and over half of that population identify as white men.

The report notes that the number of companies with board diversity over 40 percent has doubled, but state that the rate of change is still slow.

Despite criticism that the law places even greater emphasis on inalienable qualities like race and sex, it has broad support from business leaders, including the California Hispanic Chambers of Commerce.

“Greater boardroom equity that is inclusive of Latinos will lead to greater results for business and our state,” the chamber said in a statement.

This law follows Newsom’s new bill AB3121 that creates a new task force examining the idea of reparations for Black Americans in California. 


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