Judge Strikes Down California Board Diversity Law

By Ani Huang posted 04-22-2022 00:00


A California law requiring public companies in the state to demonstrate ethnic board diversity was struck down by a Los Angeles County judge, who found that the law violated the state constitution by mandating quotas. The ruling casts doubt on the survival of a similar 2018 California law mandating board gender diversity. 

The law, enacted in 2020, reportedly led to a significant increase in minority-held board seats (from 13.9% to 22.6%, according to one paper). Despite this, a ruling against the law was not unexpected.

Meanwhile, activists Arjuna Capital and Proxy Impact released their fifth annual Racial and Gender Pay Scorecard, in which a “failing grade” was awarded to almost half of the companies surveyed due to not having publicly disclosed “raw” (unadjusted) median racial and gender pay gaps. The report noted that several companies had previously committed to disclose pay gaps and had not yet done so, resulting in falling grades for those companies. Other findings included: 

  • Eleven companies now disclose raw U.S. racial and gender pay gaps, including Mastercard, Bank of New York Mellon, American Express, Citigroup, Adobe, Starbucks, Pfizer, Microsoft, Target, Home Depot, and Chipotle.

  • Arjuna is now calling for all companies to disclose a “blend of approaches” between UK and U.S. practices—in other words, companies should disclose both unadjusted median pay gap and adjusted “equal pay for equal work” pay gap, if one exists.

  • In 2022, nine shareholder proposals on gender and racial median pay gap disclosure have already been filed; one at Walt Disney passed with 59% support.
1 view