New California Law Requires Racial Diversity on Corporate Boards

By Charlotte Whelan of The Independent Women's Forum.

"California is now adding to its ill-advised corporate board policies. USA Today reports that Governor Newsom recently “signed a law requiring publicly traded corporations headquartered in California to appoint directors from underrepresented communities to their boards.” 

The bill text states: “This bill would require, no later than the close of the 2021 calendar year, such a corporation to have a minimum of one director from an underrepresented community, as defined.” The text continues and describes a sliding scale similar to California’s approach to corporate board gender quotas to increase the number of individuals from underrepresented communities on corporate boards. 

I’ve written previously on California’s corporate gender quota and similar arguments apply against this new law. Both racial and gender quotas signal that women and minorities cannot reach leadership positions without the special treatment that the laws provide. This actively undermines the hard work that many of these individuals do every day. 

Unfortunately, while California is the first state to impose quotas on all publicly-traded corporations in the state, private companies have turned to similar initiatives. Chicago Tribune reports: “As many as a half-dozen companies have said they’ve adopted workforce quotas in recent months. These include Wells Fargo & Co., the nation’s third-biggest bank, which said it will increase Black leadership to 12%…[F]ashion house Ralph Lauren Corp. said it aims to make 20% of its global leaders people of color, including Black, Asian, and Latino workers. Delta Air Lines, where 7% of the top 100 in the organization are Black, will double the percentage of Black officers and directors by 2025.” 

In fact, a report on Women and Minorities on Fortune 500 Boards predicts that there will be an increase of women and minorities to 40 percent by 2024. The report also finds: “minority men have made almost as much progress in the last 2 years as they did in the 12 years before that.” Both African American women and Asian/Pacific Islander women have seen increases in recent years, 26.2 percent and 38.6 percent, respectively. 

Women and racial minorities are already increasing their presence on corporate boards by their increased presence in the workforce and hard work. Quotas only cheapen these achievements by creating a sense of tokenism instead of individuals being on equal footing with the other members."