Overturn of corporate diversity quotas laws upheld in California appeals court

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An appeals court on Monday upheld the termination of two California laws intended to force corporate boards to submit to diversity quotas.

Senate Bill 826 — passed in 2018 — instituted a quota of at least one woman on the board of directors for any company headquartered in California. 

Assembly Bill 979 — passed in 2020 — established a similar quota for members of "underrepresented communities" inside California companies. 

Demographics eligible for the quota included racial and sexual minorities.

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The gender, race, and sexuality quotas established by these bills were commensurate with the size of companies' boards of directors.

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For example, according to Assembly Bill 979, "a corporation with more than 4 but fewer than 9 directors to have a minimum of 2 directors from underrepresented communities, and such a corporation with 9 or more directors to have a minimum of 3 directors from underrepresented communities."

The California Appeals Court's termination of the quotas upheld previous rulings by lower courts.

Los Angeles Superior Court Judge Maureen Duffy-Lewis struck down Senate Bill 826 in May, writing in her opinion that the laws violated equal protection clauses in the California Constitution.

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Los Angeles Superior Court Judge Terry A. Green struck down Assembly Bill 979 in April on similar grounds.

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