California’s board diversity laws are not currently enforceable. Both SB 826, which set gender diversity minimums, and AB 979, which required directors from underrepresented communities, were struck down by Los Angeles Superior Court as violations of the California Constitution’s Equal Protection Clause. Permanent injunctions now bar the Secretary of State from spending any public money to implement or enforce either statute, and the state’s appeals are stayed with no resolution in sight.1California Secretary of State. Diversity on Boards
What California Companies Have to Do Right Now
Nothing, as far as these two laws are concerned. The Secretary of State’s office has stopped collecting board diversity data and removed the relevant fields from its disclosure forms. No fines have ever been collected under either statute, and none are being imposed now.1California Secretary of State. Diversity on Boards
The statutes themselves still sit in the California Corporations Code. They are dead letters unless a court lifts the injunctions or the Legislature replaces them, and neither has happened.
Which Companies the Laws Covered
Both laws applied to any publicly held domestic or foreign corporation whose principal executive offices were located in California, based on the address listed in the company’s SEC 10-K. “Publicly held” meant shares listed on a major U.S. stock exchange. Place of incorporation did not matter; the California headquarters was the only trigger.2California Legislative Information. California SB-826 Corporations: Boards of Directors
What SB 826 and AB 979 Required
SB 826, signed in 2018, required every covered corporation to have at least one female director by the end of 2019. By the end of 2021, the minimum scaled with board size: three female directors on boards of six or more, two on five-director boards, and one on boards of four or fewer. A director counted as female if she self-identified as such, and companies could expand their boards rather than replace sitting directors.2California Legislative Information. California SB-826 Corporations: Boards of Directors
AB 979, signed in 2020, added a parallel requirement for directors from underrepresented communities. By the end of 2021, every covered corporation needed at least one. By the end of 2022, the minimum rose to three for boards of nine or more, two for boards of five to eight, and one for boards of four or fewer. The law defined “underrepresented community” to include anyone who self-identified as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or as gay, lesbian, bisexual, or transgender.3California Legislative Information. California AB-979 Corporations: Boards of Directors: Underrepresented Communities
How the Laws Were Struck Down
Three California taxpayers filed two separate suits, collectively known as Crest v. Padilla, arguing that spending public money to enforce race- and gender-based board quotas violated the Equal Protection Clause of the California Constitution. Because the cases were brought as taxpayer suits, the plaintiffs did not need to show personal harm; standing to challenge government spending was enough.
Los Angeles Superior Court Judge Terry Green ruled first, finding AB 979 unconstitutional. He held that the law treated people differently based on race, ethnicity, and sexual orientation without a compelling justification, and that the quota system was not narrowly tailored to the state’s interest in board diversity. Judge Maureen Duffy-Lewis reached the same conclusion about SB 826 on identical equal protection grounds. Both courts issued permanent injunctions blocking the state from spending any money on enforcement or implementation.1California Secretary of State. Diversity on Boards
Why the Appeals Are Frozen
The Secretary of State appealed both rulings and asked the appellate court to stay the injunctions during the appeals. In December 2022, the California Court of Appeal denied those requests, so the injunctions remain in place throughout the appeal process.
The appeals have since been stayed for a separate reason. The California Supreme Court is considering Taking Offense v. State of California, which will decide whether taxpayers can bring these kinds of suits against state officials to block enforcement of newly enacted statutes. If the Supreme Court rules that taxpayer standing does not apply here, the Crest cases could be dismissed on procedural grounds without any appellate ruling on the equal protection question. If taxpayer standing is upheld, the appeals resume and the appellate courts will take up whether the lower courts analyzed the constitutional issue correctly.
Oral argument in Taking Offense has not been scheduled. Until that case is decided and the Crest appeals are unpaused, the injunctions stand.
Other Board Diversity Mandates Have Also Fallen
California’s statutes are not the only diversity requirements that have collapsed. Nasdaq adopted rules in 2021 requiring listed companies with five or more directors to have at least one female director and at least one who self-identifies as an underrepresented minority or LGBTQ+, or to publicly explain the gap. In December 2024, the U.S. Court of Appeals for the Fifth Circuit, sitting en banc, vacated the SEC order that had approved those rules.4United States Court of Appeals for the Fifth Circuit. Alliance for Fair Board Recruitment v. SEC Nasdaq confirmed it will not seek further review, so listed companies no longer face a diversity disclosure or compliance obligation under those rules.5ArentFox Schiff. Fifth Circuit Vacates SEC’s Approval of Nasdaq’s Diversity Rules
Institutional Shareholder Services announced in 2025 that it would indefinitely suspend using board gender and racial or ethnic diversity as factors in its voting recommendations for director elections at U.S. companies. ISS had previously recommended “against” votes at boards that lacked diversity; that pressure is now gone. No federal law currently mandates board diversity for publicly traded companies.
The Practical Picture for California-Headquartered Companies
From a legal compliance standpoint, California-headquartered public companies face no enforceable board diversity mandate at the state, exchange, or federal level. The California statutes are enjoined, the Nasdaq rules are vacated, and ISS has stepped back from its voting pressure.
Board composition still matters in practice. Many institutional investors and proxy advisory firms continue to evaluate diversity as part of their governance assessments, even without automatic negative voting recommendations. Companies that diversified their boards during the brief window when SB 826 and AB 979 were active have generally kept those directors in place. The mandate is gone; the governance conversation it prompted has not entirely disappeared.