Story at a glance

  • On Wednesday, Gov. Newsom signed a bill into law mandating a certain number of directors from underrepresented communities must be in publicly traded California companies.
  • Detractors say the bill fixated on boardroom quotas.

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

The law, A.B. 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 2021. 

By the end of 2022, boards with membership between four to nine members must have at least two people from underrepresented backgrounds, while executive boards with more than 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 2019, Fitton and his organization sued the state over a 2018 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.

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 doubled from 2012 to 2018, but 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, A.B. 3121, which creates a new task force examining the idea of reparations for Black Americans in California. 


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Published on Oct 01, 2020