California’s latest measures aimed at increasing diversity in the workplace are Assembly Bill 979 and Senate Bill 973, which took effect on January 1, 2021. The two bills are legislators’ latest efforts to increase workplace diversity by requiring more diversity in corporate boardrooms (AB 979) and imposing new pay data reporting requirements based on employees’ gender, race, and ethnicity.
Diversity Requirements for Public Company Boards in California (AB 979)
AB 979 is aimed at achieving diversity on boards of publicly held corporations headquartered in California. The new law requires qualifying companies to increase diversity on their boards of directors by including more directors from “underrepresented communities,” which are defined as individuals who self-identify as:
- Gay
- Lesbian
- Bisexual
- Transgender
- African American
- Black
- Latino
- Hispanic
- Asian
- Native American
- Native Hawaiian
- Pacific Islander
- Alaska Native
Legislators’ latest effort to increase workplace diversity requires publicly held companies covered by the law to successively increase the proportion of directors from underrepresented communities on corporate boards by December 31, 2022:
- By December 31, 2021, the corporate board must have at least one director from an underrepresented community; and
- By December 31, 2022, the corporate board with at least nine directors must have at least three directors from underrepresented communities. The mandatory threshold for corporate boards with five to eight directors is two directors from underrepresented communities.
In addition, starting on March 1, 2022, or sooner, the California Secretary of State will be required to publish annual reports documenting affected corporations’ compliance with AB 979.
New Pay Data Requirements (SB 973)
California’s other measure aimed at compelling employers to diversify their workplaces and eliminate discrimination requires certain employers to file new pay and hours data reports with the Department of Fair Employment and Housing (DFEH). The new law applies to private employers with at least 100 employees that are required to file an annual Employer Information Report (EEO-1) pursuant to federal law.
The new pay and hours data must be filed annually starting on or before March 31, 2021. The report must include the number of employees categorized by:
- Gender
- Race
- Ethnicity
The new pay data requirements apply the following categories of workers:
- service workers
- laborers
- first or mid-level officials
- first or mid-level managers
- executive or senior-level officials
- executive or senior level manager
- professionals
- technicians
- operatives
- helpers
- sales workers
- craft workers
- administrative support workers
The pay data report must include W-2 income and hours worked for all employees. The new law authorizes the DFEH to investigate and prosecute employees’ complaints alleging equal pay violations or compensation discrimination.
Speak with a California Employment Lawyer
Given that California labor laws are constantly changing, employers need to keep their fingers on the pulse of new laws to ensure that they achieve workplace diversity as required by state and federal law.
Contact a California employment lawyer to ensure that your company is in compliance with all applicable laws to avoid potential complaints of discrimination and DFEH claims. Get a case review with our attorneys at Structure Law Group by calling (408) 441-7500.