California’s AB 979, the board diversity law requiring publicly held corporations headquartered in the state to seat directors from underrepresented communities, is no longer enforceable. State and federal courts struck it down as unconstitutional in 2022 and 2023, and the California Secretary of State is permanently enjoined from enforcing the statute or collecting the diversity data it required. Covered corporations face no fines, no filing obligation under the law, and no realistic prospect of enforcement resuming.
What the Law Required
AB 979 reached any corporation with shares listed on a major U.S. exchange like the NYSE or NASDAQ whose principal executive office, as stated on its SEC Form 10-K, was in California.1California Legislative Information. California Corporations Code CORP 301.4 State of incorporation did not matter. A Delaware or Texas corporation headquartered in California was covered.
A “director from an underrepresented community” was anyone who self-identified as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identified as gay, lesbian, bisexual, or transgender.1California Legislative Information. California Corporations Code CORP 301.4 Self-identification was the standard; no documentation or outside verification was required.
Compliance rolled out in two phases. By December 31, 2021, every covered corporation needed at least one qualifying director regardless of board size. By December 31, 2022, the minimums scaled with the board:
- Nine or more directors: at least three from underrepresented communities
- Five to eight directors: at least two
- Four or fewer directors: at least one
Corporations were free to add seats rather than displace existing directors to reach these numbers.1California Legislative Information. California Corporations Code CORP 301.4
The fines were steep on paper. Each unfilled required seat counted as a separate violation each calendar year, with the first violation at $100,000 and any subsequent violation at $300,000.1California Legislative Information. California Corporations Code CORP 301.4 A nine-member board missing all three required directors could in theory face up to $700,000 for a single year. Failing to file the required board information with the Secretary of State carried a separate $100,000 fine. None of these penalties are being collected.
How the Courts Struck It Down
In April 2022, a Los Angeles Superior Court judge ruled in Crest v. Padilla that AB 979 violated the Equal Protection Clause of the California Constitution. The court found that the law used suspect classifications based on race, ethnicity, sexual orientation, and gender identity, and that the state failed to show a compelling government interest sufficient to survive strict scrutiny. The court entered a permanent injunction against enforcement.2California Secretary of State. Diversity on Boards California sought to stay the injunction pending appeal; the California Court of Appeal denied that request in December 2022, and the injunction has remained in place.
A federal court reached the same result on May 15, 2023. In Alliance for Fair Board Recruitment v. Weber, the U.S. District Court for the Eastern District of California held that AB 979 was a racial quota facially unconstitutional under the Fourteenth Amendment’s Equal Protection Clause and entered its own injunction. California appealed to the Ninth Circuit, but that appeal has been stayed pending the related case Meland v. Weber. As of late 2025, briefing had not begun and no merits ruling has been issued.
Both injunctions remain in full force. The Secretary of State is prohibited from spending state funds on enforcement of Corporations Code sections 301.3, 301.4, 2115.5, and 2115.6, and has removed the four board-diversity data fields from the Publicly Traded Corporate Disclosure Statement.2California Secretary of State. Diversity on Boards
What This Means for Your Company Now
If you run or advise a California-headquartered public company, AB 979 imposes no current obligation. You do not need to seat directors to meet its numeric minimums, you do not report board demographics to the Secretary of State under this law, and you face no fines for a board that would have fallen short under the former requirements. The appeals that remain technically pending have shown no sign of movement and no indication that enforcement will resume.
One boundary matters. The rulings struck down government mandates based on race, ethnicity, sexual orientation, and gender identity. They did not make board diversity itself unlawful. A company can still recruit diverse candidates, set internal composition goals, and publish voluntary disclosures about its board. What it cannot be forced to do is fill seats to meet a government-set demographic quota.
The Related Gender Diversity Law, SB 826
AB 979 was modeled on SB 826, a 2018 California statute that required female directors on public company boards: at least one by the end of 2019 and up to two or three depending on board size by the end of 2021.3California Legislative Information. SB 826 Corporations – Boards of Directors The fine structure was identical, $100,000 for a first violation and $300,000 for each subsequent one.
SB 826 met the same fate weeks after AB 979. In May 2022, the same court struck it down under the California Constitution’s Equal Protection Clause, finding that the state could not show the law served a compelling interest, was necessary to serve that interest, or was narrowly tailored. The court noted that the state’s own expert witnesses attributed the gender gap on boards to factors other than intentional discrimination, including limited board turnover and networking patterns. The Secretary of State is equally barred from enforcing SB 826.2California Secretary of State. Diversity on Boards If you were tracking compliance across both statutes, both are inert.