Gov. Gavin Newsom recently signed a bill that makes it illegal to not have at least one minority or LGBTQ board member in all California publicly traded corporations.
This law piggybacks on a bill signed by former Gov. Jerry Brown in 2018 that made the same requirements regarding women’s inclusion on boards.
On penalty of a fine up to $300,000, the new law requires all public corporations headquartered in California to comply by 2021. Corporations with four to eight boards of directors must appoint two minority or self-identifying LGBTQ members by the end of 2022. Boards larger than eight members must include three by the end of the same calendar year.
“This is an opportunity, really, to get people of color at the table where the decisions are made,” said Assemblyman Chris Holden (D), as reported by the Sacramento Bee. “I think this is a first of its kind.”
Not everyone agrees with this method of attempting racial justice. Daniel Ortner, an attorney with the Pacific Legal Foundation, said the new law is unconstitutional. Currently, the Pacific Legal Foundation is in litigation with the Ninth Circuit Court of Appeal over the first version of the law requiring gender quotas.
“Really it’s a simple principle, which is that laws that target and discriminate on the basis of classes like race or sex are presumptively unconstitutional, especially when they inflict quotas, which is a particularly disfavored method of dealing with racial or gender inequality,” said Ortner told the Northern California Record in an interview.
Looking at precedent, the supreme court has been very clear about not upholding racial or sex quotas where specific positions are held out on the basis of race or gender, said Ortner.
Already, the organization Judicial Watch has filed a lawsuit, said Ortner, and he anticipates more following the signing of this new addendum to the original gender quota law.
People are concerned about where this leads, including philanthropic organizations, Ortner said.
“Right now, this only affects publicly traded companies that are incorporated or headquartered in California, but the line is—when the government has already started down this direction of mandating that companies have to alter their internal structure to reflect the biases of the state, that’s not going to stop,” said Ortner. “Next it could be 501(c)(3)’s, it could be privately held companies, it could be other organizations that are going to be subject to the overreach from the State of California.”
Senior attorney for the Pacific Legal Foundation Anastasia Boden said the unconstitutionality of the law lies in its disparate treatment of different races and genders, as reported by the Sacramento Bee.
“Quotas require the very thing that we’re trying to get rid of in society and that is handing out benefits and burdens solely because of someone’s race or sex or sexual identity,” Boden said, as reported by the Sacramento Bee. “They essentially tell some people they need not apply for certain positions, simply by virtue of their birth. And that’s what makes them not only pernicious but unconstitutional.”