Public Corporations Required to Increase Diversity on Board of Directors

A new law in California will require publicly held companies in their state to diversify their Board of Directors by the end of this year. While this may not seem like it has an impact on most workers across the state, diversifying business’ Boards of Directors can ultimately result in increased benefits for their employees. If you or someone you know is facing an employment issue in their workplace, talk to an experienced California employment law attorney in your area today.

What is AB 979?

The new law, known as AB 979, requires that any domestic or foreign publicly held company that has a primary executive office in the state of California diversifies its Board of Directors by December 31, 2021. By that deadline, all companies that fall under the umbrella of the law must have at least one Board member that is from an underrepresented community. In addition, by December 31, 2022 any Board of Directors that has more than four but fewer than nine members must have a minimum of two Board members from underrepresented communities, and a business with nine or more directors on their Board must have a minimum of three members from underrepresented communities.

To be considered a Board member from an underrepresented community, the individual must self-identify as belonging to one of the following groups: 

  • Black,
  • African American,
  • Hispanic,
  • Latino,
  • Asian,
  • Pacific Islander,
  • Native American,
  • Native Hawaiian,
  • Alaska Native, or
  • Who self-identifies as gay, lesbian, bisexual, or transgender.

The Purpose of the New Law

The purpose of the new law was to put action behind the words of companies principally located in California that pledged to support diversity but were not doing so themselves. The author of the bill noted that despite public statements supporting diversity, companies were not actually increasing the diversity in their workplaces. AB 979 is meant to address issues of diversity in publicly held companies from the top down, and the goal is to eventually address issues of ethnic pay gaps, promote further Board of Directors diversity, and retain employees through better company culture and professional development. Many groups like the California Hispanic Chamber of Commerce and others have come out in support of the new law, as they have also noted a substantial lack of diversity in company boards.

How the Law May Impact You

By diversifying a publicly held company’s Board of Directors, workers can ultimately benefit from the change. Diversification often leads to discussions and investigations into issues of equal pay, discrimination, wage and hour issues, harassment, and other problems that may plague workers of that company. Seeing members of underrepresented communities at the highest levels of leadership can also inspire employees who are minorities to stay with their employer because they feel seen and included. The reverberations of this new law may be felt for years to come with employees affected by diversity requirements.

Talk to a Lawyer Now

If you have an employment law issue in California, talk to an experienced employment law attorney in your area today.