Judge rules California diversity law is unconstitutional

A California court recently ruled that a diversity statute forcing businesses to add people of color or members of the LGBT community to their board of directors is unconstitutional. According to a summary judgment published by Judicial Watch, a legal group that filed a permanent injunction against the bill, the court decided the measure violated California’s constitutional equal protection guarantee.

Judicial Watch President Tom Fitton told the Associated Press, “[The ruling] declared unconstitutional one of the most blatant and significant attacks in the modern era on constitutional prohibitions against discrimination.”

The law was signed by California Governor Gavin Newsom in 2020 and stated that by the end of 2021, all corporations with an executive office in California must have at least one minority person on their board of directors. It further stipulated that in businesses with four to nine directors, two minority board members and organizations with more than nine directors must have three minority members on the board. When signing the law, Newsom claimed, “When we talk about racial justice, we talk about empowerment, we talk about power, and we need to talk about seats at the table.”

According to a “Diversity on Boards” study issued last month, 300 out of 700 organizations have complied with the rule but more than half of those surveyed did not provide the required disclosure statement. Companies that breach the diversity law could face fines of up to $100,000 for the first offense and $300,000 for subsequent offenses.

The diversity bill follows a similar rule enacted by former Governor Jerry Brown in 2018 that required female representation on boards of directors for corporations based in California. However, Brown admitted the law would be difficult to defend and may be overturned. Judicial Watch is also contesting the 2018 statute in a similar lawsuit.

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