In Alliance for Fair Board Recruitment, a federal court ruled in May 2023 that California’s law requiring corporations to maintain minimum membership on a corporation’s board of directors from individuals who identify as members of certain races and genders violates the Equal Protection Clause of the US Constitution.
In 2020, Washington adopted its own version of California’s law. Washington’s version requires only a “gender-diverse” board of directors. In addition, in certain circumstances, Washington requires a corporation to deliver a “board diversity discussion and analysis” to its shareholders. The board diversity discussion must include: a discussion relating to identifying, nominating, and maintaining a diverse group on its board of directors. As defined by the statute, “diverse groups” means women, racial minorities, and historically underrepresented groups.
In light of the US Supreme Court’s recent ruling in the Students for Fair Admissions overturning affirmative action, and the Alliance for Fair Board Recruitment Ruling, will Washington’s “gender-diverse” board of director statute stand?
Your board of directors should review these cases and their impact on all diversity, equity, and inclusion efforts with counsel. Company policies that violate the Equal Protection clause can come with significant penalties to the Company, including but not limited to damages and attorney’s fees.