Over the past several years, California’s Democratic supermajority has passed a slate of sweeping regulations seeking to legally enshrine DEI (Diversity, Equity, and Inclusion) principles within the state’s corporate sector. In 2018, then-Governor Jerry Brown signed a law requiring publicly listed corporations in California to have at least two women on their board if the board had five members or less, and at least three women if the board had six or more members. The bill was so obviously unconstitutional that the state had to resort to claiming the law was toothless in its defense, with one official saying in court, “It’s required but there’s no penalty, so it’s essentially voluntary.” The law was ruled unconstitutional in 2022.

In 2020, Governor Gavin Newsom signed a similar bill that required corporations within the state to have at least one member from an “underrepresented community” on their board, and for some corporations, at least two or three such directors by the end of 2022, depending on the size of the board. Firms that refused to comply with the mandate could face fines of up to $100,000 for the first violation, and up to $300,000 for repeated violations. Similar to the 2018 law, this bill was ruled unconstitutional on equal protection grounds earlier this year. 

Also this year, Newsom signed a bill into law requiring venture capital firms operating in California to release annual reports detailing the number of “diverse” founders they funded, specifically regarding race, disability status, and sexual orientation. Whether this law will face any legal challenges remains to be seen.