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Newsom signs law mandating more diversity in California corporate boardrooms

By Patrick McGreevy, Los Angeles Times on

Published in Business News

SACRAMENTO - Many California corporations will have to increase the diversity of their boards of directors under a new law signed Wednesday by Gov. Gavin Newsom to address a shortage of people of color in executive positions.

The law requires some 625 publicly held corporations headquartered in California to include at least one person from an underrepresented community by the end of next year, with additional appointments required in future years.

Newsom said during an online signing ceremony that the law is necessary to promote diversity in corporate boardrooms as part of a broader effort to improve racial equity in the U.S.

"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 new law is likely to be challenged in court by conservative groups including Judicial Watch, which sued to contest a 2018 law that required a minimum number of women on corporate boards.

"It's a quota, and quotas are unconstitutional," said Thomas Fitton, president of Judicial Watch, regarding the law signed by Newsom. Fitton made the same argument in a pending lawsuit about the law requiring women on corporate 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," Fitton said. "It's a violation of the equal protection clause of the U.S. Constitution. It undermines the core legal concept of equal protection."

Other constitutional law experts disagree that the measure is on weak ground, including Erwin Chemerinsky, dean of the UC Berkeley School of Law. He said the laws on the subject are unclear and will have to be decided by the courts.

"I believe that there is a compelling need to enhance diversity on corporate boards," Chemerinsky said. "The question is whether a court will find these laws to be sufficiently narrowly tailored. Because there are few other alternatives, I think there is a strong argument that such laws are constitutional."

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