Among the many questionable actions of California governor Gavin Newsom was his signing of AB 979, a bill requiring publicly-held companies with headquarters in the state to have board members from underrepresented communities. (Since the phrase “underrepresented communities” does not exactly roll off the tongue, going forward I shall use “UC” instead.) Thankfully, a California court put the kybosh on this intrusion into corporate affairs.
The law specified how many UC members had to be included based on the size of the board. A similar law in 2018 required more women on boards. A company could tick off several boxes if they got a woman who was also a member of one or more of the UC, which must have been a relief as the fines for not complying with AB 979 ran into hundreds of thousands of dollars.
The new law immediately ran into problems. There were murky areas about what constituted a UC. The law only required the UC board member to be seated for a portion of the year but did not define how small a portion counted for compliance. And what about bi-racial or multi-racial board members? Would they automatically count or did they have to formally identify themselves as the member of the desirable UC to satisfy the law?
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