California is top of the table when it comes to progressivism and diversity, equity, and inclusion (DEI) initiatives. But let’s give Maryland some credit (or blame) for trying to out-woke the Golden State. Three years ago, California governor Gavin Newsom signed into law AB 979, which required public companies headquartered in California to have at least one board director who is LGBT or from a minority community. In 2021, Maryland imposed its own DEI mandates on firms, which cast a much wider net than even California legislators were comfortable doing.
Maryland’s corporate diversity legislation, HB 1210, requires businesses in the state to demonstrate diversity in their board or executive leadership or support for “underrepresented communities” in their mission to qualify for state grants, tax credits, or contracts worth more than $1 million. While only an estimated 700 public companies in California had to comply with AB 979, as many as 430,000 Maryland businesses may have to comply with HB 1210’s reporting requirements or risk forfeiture of their company charters. Though the law went into effect last July, the state just sent out the first required reporting documents on February 8. They are due April 15.
Craig Williams, a CPA in Carroll County, Maryland, says that the state “snuck in” the new DEI reporting requirement along with the required Maryland annual report for companies. Williams says that many of his clients think the state shouldn’t tell them how to promote diversity. “Using legislation to mandate DEI crosses a line,” he said. “It pits one race against another.”
The law requires Maryland to maintain a state equity report that summarizes diversity data for each company and catalogs their “support of underrepresented communities in the entity’s mission.” To date, the state has hired just one person to process the hundreds of thousands of paper-copy DEI reports that will soon flood its offices. The Maryland General Assembly estimates that the new law will cost at least $686,200 in fiscal year 2023 and “significantly” more thereafter.
On the new “corporate diversity addendum” report, firms must check boxes to indicate if they have members of various minority communities on their board or executive leadership team. And on 12 DEI-related statements, they must check a box (or not) to determine compliance. For example, one statement asks companies to confirm if they have a “supplier diversity policy.” Another asks if the company “measures the percentage of contract dollars awarded to businesses owned by members of underrepresented communities.” The document states that only companies that check at least four of the 12 boxes can “qualify to receive a State benefit.” In fiscal 2020, 1,940 Maryland companies received payments of more than $1 million from the state, and 12,136 received grants of more than $1 million. Those no longer deemed diverse enough under the new regime will likely scramble to hire board members or executives from underrepresented groups.
Will the Maryland law pass muster? A letter from the state attorney general to Governor Larry Hogan on the legality of HB 1210 says, “If the bill is implemented to require entities to have a certain racial composition on its board or executive leadership in order to receive a State benefit, an equal protection issue would be raised.” But the letter concludes, “so long as the implementing regulations do not require a race-based quota on the board or in executive leadership in order for an entity to receive a State benefit, the bill is not clearly unconstitutional.” Meantime, in California last year, a Los Angeles County Superior Court ruled that the AB 979 law violated the Equal Protection Clause of the state constitution and was therefore unenforceable.
Maryland gave Joe Biden a larger margin of victory (33 points) than did California and Delaware and every other state but Vermont and Massachusetts. Republicans hold just one of Maryland’s eight congressional seats (compared with 12 of 52 in California), and Democrats tried to gerrymander that seat away from the GOP until a judge struck down their proposed new congressional map last year. But the seventh state to join the Union hasn’t always been so blue. Richard Nixon won Maryland in a landslide in 1972, Ronald Reagan carried it in 1984, and George H. W. Bush prevailed there in 1988.
According to census data, Maryland’s population is 29 percent black, 12 percent Hispanic, 7 percent Asian, and just 47 percent white, down from 55 percent in 2010. Maryland is home to more minorities than whites, and the state’s population of working-age residents is even less white. According to a Baltimore Sun analysis of census figures, Maryland has “the nation’s most affluent and highly educated black population.” The state lumps all nonwhites—blacks, Hispanics, Asian-Pacific Islanders, Native Hawaiians, Native Americans, and Native Alaskans—into the same group that it dubs “underrepresented communities.”
Asians have, on average, higher incomes and more educational degrees than white Americans, so their inclusion as an “underrepresented community” in Maryland’s official intersectional hierarchy underscores how HB 1210 is little more than an identity politics ploy to reward key Democratic constituencies. As long as employers aren’t discriminating in hiring, the state has no business concerning itself with the DEI practices of private companies. Williams says that at least one of his clients will refuse to fill out the form. Here’s hoping more Maryland businesses do the same.
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