October 24, 2020

Volume X, Number 298

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AB 979 Requires California-Based Publicly Held Corporations to Diversify Their Boards of Directors

On September 30, 2020, Governor Newsom signed Assembly Bill (“AB”) 979, which requires publicly held corporations headquartered in California to diversify their boards of directors with directors from “underrepresented communities” by December 31, 2021. This bill is similar to Senate Bill 826, signed into law in 2018, which required publicly held corporations headquartered in California to include women on their boards.

AB 979 defines “director from an underrepresented community” as “an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.”  Foreign and domestic publicly held corporations with principal executive offices in California must have at least one director from an underrepresented community on their boards by December 31, 2021.  By December 31, 2022, covered corporations with boards of nine or more directors must have a minimum of three directors from underrepresented communities on their boards, and covered corporations with boards of more than four but less than nine directors must have a minimum of two directors from underrepresented communities.  Corporations may increase the number of directors on their boards to comply with these requirements.

Starting no later than March 1, 2022, the California Secretary of State will publish annual reports on its website documenting compliance with these diversification requirements. Companies that fail to timely comply will be fined $100,000 for the first violation and $300,000 for subsequent violations.

Takeaways

Similar to SB 826, which required gender diversity on boards, AB 979 will likely be challenged on constitutional and other grounds.  Nonetheless, covered corporations and their boards of directors should begin planning for the December 31, 2021 compliance deadline.  Moreover, AB 979 provides covered corporations an opportunity to complement existing diversity and inclusion strategies if the changes are implemented with intentionality by selecting candidates that fit the organization’s business needs and help the organization achieve its diversity and inclusion goals.

Jackson Lewis P.C. © 2020National Law Review, Volume X, Number 275
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About this Author

Michael Thomas Employment Lawyer Jackson Lewis
Principal

Michael Thomas is a Principal in the Los Angeles, California office of Jackson Lewis P.C. His day to day experience includes defending employers in state and federal wage and hour class actions, litigation brought under the Private Attorney General’s Act (“PAGA”), and single plaintiff cases. 

Mr. Thomas has defended employers in a wide variety of industries, including manufacturing, retail, restaurant, hospitality, transportation, janitorial services, security services, agriculture, and the gig economy. He has a record of...

213-630-8202
Associate

Amy P. Frenzen is an Associate in the San Francisco, California, office of Jackson Lewis P.C.  Her practice focuses on representing employers in wage and hour class actions and other workplace law matters.  She is a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals (IAPP).

Prior to joining Jackson Lewis, Ms. Frenzen practiced general commercial litigation at a large national firm, including defense of software and hardware developers in contract disputes. She also worked in commercial regulatory affairs at a major biotech company, and in the Products Liability practice group of a large national firm defending pharmaceutical manufacturers against claims of unfair trade practices, off-label promotion, personal injury, and wrongful death in state and federal courts around the country. Ms. Frenzen also has experience advising large corporations, nonprofits, and political action committees on various political compliance issues, including campaign finance, lobby disclosures, and government ethics.

While pursuing her law degree, Ms. Frenzen was on the staff of the University of San Francisco Law Review and a Literary Editor of the University of San Francisco Maritime Law Journal. She also served as a legal extern with the Bay Area Air Quality Management District and the Sierra Club’s Environmental Law Program; and received a CALI Award in Administrative Law.

Practices

  • Class Actions and Complex Litigation
  • General Employment Litigation
  • Privacy, Data and Cybersecurity
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