CDF attorneys Leigh A. White and Ryan P. Snyder co-authored the article "California Board of Directors Diversity Law Violates Equal Protection," for the Daily Journal Corporation.
Excerpt:
On April 1, 2022, a Los Angeles County judge ruled that AB 979, which requires publicly held corporations with a principal executive office in California to have at least one member of the Board of Directors from an “underrepresented community,” violated the Equal Protection Clause of the California Constitution. As discussed in more detail below, the trial court's decision in Crest v. Padilla regarding AB 979's constitutionality may be interpretative of future challenges to other California or federal legislation and may provide clarity to companies regarding diversity and reporting requirements for their boards of directors.
On September 30, 2020, Governor Newsom signed Assembly Bill (“AB”) 979, which was codified as California Corporations Code 301.4. Under AB 979, a covered company had to have one director from an underrepresented community by December 31, 2021. A director from an underrepresented community included a person who self-identified as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, gay, lesbian, bisexual, or transgender. Publicly held corporations with a principal executive office in California that did not have at least one Board member from an underrepresented community by the end of 2021 faced large fines. The Legislature supported AB 979 with statistics from a variety of studies identifying diversity inequality in the boardroom setting. For example, 2018 data from a study by Deloitte and the Alliance for Board Diversity showed that only 8.6% of Fortune 500 company board seats were held by people identified as African American/Black, 3,8% were Hispanic/Latino, and 3.7% were Asian/Pacific Islander. The United States Bureau of Labor Statistics also reported that in 2019, 90 percent of chief executives were Caucasian. The Legislature’s stated intent through AB 979 is "to require, by January 2023, every publicly held corporation in California to achieve diversity on its board of directors by having a minimum of directors from underrepresented communities on its board."
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Leigh White
In her over two decades of defending and advising employers, Leigh A. White has successfully resolved complex litigation and disputes, ranging from individual claims of discrimination, harassment, retaliation, wage and hour…
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