Yes, DEI still exists in California, but the ground under it has shifted hard. The state’s most ambitious mandates—demographic quotas for corporate boards—have been ruled unconstitutional, a newer venture capital diversity reporting law is on hold, and Proposition 209 continues to forbid race- and sex-based preferences across all public employment, education, and contracting. Federal policy has moved in the same restrictive direction, with rescinded contractor affirmative action rules and fresh EEOC guidance treating certain DEI practices as potential Title VII violations. What remains legal and enforceable is narrower than it was five years ago: race-neutral outreach, broad anti-discrimination protections under state law, and voluntary programs that don’t sort employees by protected characteristics.
The Board Diversity Laws Were Struck Down
California passed two laws requiring publicly traded companies headquartered in the state to place women and members of underrepresented communities on their boards. SB 826 (Corporations Code Section 301.3) set escalating minimums for female directors.1California Legislative Information. California Code, Corporations Code – CORP 301.3 AB 979 (Section 301.4) did the same for directors who self-identify as Black, Hispanic, Asian, Pacific Islander, Native American, or LGBTQ+.2California Legislative Information. California Corporations Code Section 301.4 Both carried fines of $100,000 for a first violation and $300,000 for each one after.
Los Angeles Superior Court judges struck down both statutes in Crest v. Padilla: AB 979 in April 2022 and SB 826 in May 2022. Both rulings found the quotas violated the Equal Protection Clause of the California Constitution, holding that the state had not shown a compelling governmental interest or evidence of specific discrimination that narrowly tailored quotas could remedy. The Secretary of State appealed and sought emergency stays; a California appeals court denied the stay requests and left the permanent injunctions in place.
The statutes are still printed in the Corporations Code, but they are dead letters. No company faces fines. No company is required to meet the demographic targets. As of 2026, no California court has reversed the trial court rulings.
The Nasdaq Board Diversity Rule Is Also Gone
California companies listed on Nasdaq briefly faced a separate diversity requirement. In 2021 the SEC approved a Nasdaq rule requiring listed companies to disclose board diversity statistics and to have at least two diverse directors or explain why they did not. In December 2024, the Fifth Circuit vacated the rule in Alliance for Fair Board Recruitment v. SEC, holding that the SEC exceeded its authority under the Securities Exchange Act of 1934.3U.S. Court of Appeals for the Fifth Circuit. Alliance for Fair Board Recruitment v. Securities and Exchange Commission The court said the SEC’s power over listing standards is limited to rules designed to prevent fraud and protect investors, not to reshape corporate governance. Nasdaq did not appeal. Listed companies have no remaining exchange-level board diversity requirements.
The Venture Capital Reporting Law Is Paused
SB 54, the Fair Investment Practices by Venture Capital Companies Law, requires covered VC firms to collect and report demographic data—gender identity, race, ethnicity, disability status, LGBTQ+ identification, and veteran status—about the founding teams of companies they fund, in aggregate and anonymized form.4California Legislative Information. California SB 54 The first reports were due March 1, 2025.
They were never collected. In March 2026, the California Department of Financial Protection and Innovation announced that it was suspending implementation and enforcement while it undertakes formal rulemaking. Covered entities do not have to register or file reports during that process. Whether SB 54 ever takes effect, gets revised, or faces the same constitutional challenge that killed the board quotas is an open question.
Proposition 209 Still Governs the Public Sector
Every public-sector DEI effort in California operates under Proposition 209, the 1996 constitutional amendment that added Section 31 to Article I. It bars the state from discriminating against or granting preferential treatment to any individual or group based on race, sex, color, ethnicity, or national origin in public employment, education, or contracting.5California Secretary of State. California Constitution Article I Section 31 – Prohibition of Discrimination or Preferential Treatment “State” covers every city, county, school district, community college, UC and CSU campus, and special district.
Voters had a chance to undo this in 2020. Proposition 16 would have repealed Proposition 209 and restored affirmative action in public programs. It failed, with about 57 percent voting no.
What this leaves for public agencies is a narrow toolkit. They can advertise positions in outlets that reach underrepresented communities, recruit at minority-serving institutions, run implicit bias training, offer mentorship and leadership development programs open to everyone, and analyze demographic data to identify where representation lags. What they cannot do is use race, sex, or ethnicity as a factor in the actual hiring, admissions, promotion, or contracting decision. The University of California has been operating this way since 1997—nearly three decades before Students for Fair Admissions v. Harvard pushed the rest of the country in the same direction.
State procurement follows the same logic. Executive orders set participation goals of 25 percent for certified small businesses and 3 percent for Disabled Veteran Business Enterprises.6Department of Financial Protection and Innovation. About the Small Business and Disabled Veteran Business Enterprise Program Those categories are facially race-neutral, which keeps them within Proposition 209. The state also maintains directories of minority-owned, women-owned, and LGBTQ+-owned businesses for informational purposes.7California Department of General Services. Office of Small Business and Disabled Veteran Business Enterprise Services
Federal Policy Now Pushes the Other Way
California employers face a second layer of pressure, and it points in the opposite direction from any state-level DEI ambitions.
Executive Order 14173 Rescinded Contractor Affirmative Action
Executive Order 11246 required federal contractors to maintain affirmative action plans for equal employment opportunity for decades. Executive Order 14173, signed in January 2025, rescinded that mandate. Federal contractors no longer have to keep race- and sex-based affirmative action plans. They now have to certify that they “do not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws,” and that certification is treated as material under the False Claims Act.8U.S. Embassy Colombia. Executive Order 14173 Ending Illegal Discrimination and Restoring Merit-Based Opportunity – Certification A false certification could expose a contractor to treble damages and per-claim penalties.
EEOC Guidance Treats Some DEI Practices as Title VII Violations
In February 2026, the EEOC issued a formal reminder that DEI policies do not exempt employers from Title VII.9U.S. Equal Employment Opportunity Commission. Reminder of Title VII Obligations Related to DEI Initiatives The accompanying technical assistance lists practices the agency views as unlawful: limiting Employee Resource Groups or mentorship programs to members of a particular racial or gender group, using protected characteristics in hiring or promotion decisions, and segregating employees by race or sex for training even when the content is identical.10U.S. Equal Employment Opportunity Commission. What You Should Know About DEI-Related Discrimination at Work
EEOC Chair Andrea Lucas has publicly invited white men to submit discrimination charges, a category the agency historically did not prioritize. Attorneys report that the volume of reverse discrimination litigation has not surged dramatically yet, but the agency’s posture has shifted.
The Supreme Court Made Reverse Discrimination Claims Easier
In 2025, a unanimous Supreme Court decided Ames v. Ohio Department of Youth Services. Several federal circuits had required majority-group plaintiffs to meet a heightened “background circumstances” test before their Title VII claims could proceed. The Court eliminated that extra hurdle, holding that “the standard for proving disparate treatment under Title VII does not vary based on whether or not the plaintiff is a member of a majority group.”11Supreme Court of the United States. Ames v. Ohio Department of Youth Services A white employee challenging a DEI-motivated hiring or promotion decision now faces the same legal standard as any other discrimination plaintiff.
What Employers Are Still Required to Do
The retreat from DEI mandates has not touched California’s underlying anti-discrimination law. The Fair Employment and Housing Act protects employees and applicants at companies with five or more workers from discrimination based on race, color, sex, gender identity, sexual orientation, religion, disability, age, national origin, and more than a dozen other characteristics.12California Civil Rights Department. Employment Discrimination FEHA prohibits harassment based on any protected category in workplaces of any size. Employees can file complaints with the Civil Rights Department within three years and pursue back pay, reinstatement, emotional distress damages, punitive damages, and attorney’s fees.
California law does not require employers to run DEI programs. It does require them not to discriminate. An employer who shuts down a DEI program under federal pressure but then tolerates discriminatory hiring faces the same FEHA liability as ever. The floor has not moved.
The Practical Picture for California Employers
DEI in California now occupies a much narrower legal space than it did a few years ago. State demographic mandates for corporate boards are unenforceable. The venture capital reporting law is on hold. Federal policy has flipped from encouraging affirmative action to requiring contractors to certify their DEI programs comply with anti-discrimination law. The EEOC is actively soliciting reverse discrimination charges, and the Supreme Court has removed the last procedural obstacle to bringing them.
Programs that are facially neutral, open to all employees, and focused on removing barriers to opportunity remain on solid legal ground. Programs that restrict access, set targets by race or sex, or use protected characteristics as factors in employment decisions carry legal risk from both state and federal directions. For employers with federal contracts, or those operating in both public and private spaces, the compliance question is no longer whether to have DEI—it is which specific practices survive scrutiny under laws that have grown considerably stricter about sorting people by who they are.