by Hans Bader
Recent Virginia legislation raises interesting constitutional issues under the Fourteenth Amendment’s equal protection clause. Virginia legislators have introduced bills that would make corporate board diversity a factor in whether to give corporations tax incentives for economic development. In deciding whether to approve tax incentives to a company, the MEI Project Approval Commission would have to consider whether “at least 30 percent of [its] board of directors consists of women and historically underrepresented groups.” The requirement is contained in House bill HB 212 and Senate bill SB 393.
The legislation doesn’t strictly require a quota, but there are instances in which courts have struck down state laws that merely encouraged the consideration of race and gender, without requiring quotas. One example is when a federal appeals court struck down a California law that required general contractors to either subcontract percentages of the work to minority, women, and disabled veteran-owned subcontractors, or demonstrate good faith efforts to do so. The required “goals” were not particularly onerous — “not less than” 15% for minority business enterprises, 5% women, 3% disabled veteran. And companies merely had to try to meet them (not succeed).
But the Ninth Circuit Court of Appeals struck down the law, because even though “the statute does not require set-asides” based on race or gender, “it encourages them.” (See Monterey Mechanical Co. v. Wilson, 125 F.3d 702 (9th Cir. 1997), striking down California Public Contract Code § 10115(c)).
So, the fact that the Virginia legislation does not impose a rigid quota for women and historically underrepresented groups does not insulate it from a constitutional challenge. A desire to help historically underrepresented groups doesn’t give government officials broad leeway to promote race or gender in selection, even as one of many factors, as the Supreme Court illustrated last year in striking down admissions policies at the University of North Carolina and Harvard University that were designed to promote racial diversity, and open doors to historically underrepresented groups like African-Americans. (See Students for Fair Admissions v. Harvard, 600 U.S. 181 (2023)).
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