Maryland, My Maryland

At City Journal, Out-Woking California, Maryland’s corporate DEI mandates go even further than Golden State legislators dared

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.

I can already imagine the pissing and moaning when businesses start to desert Maryland for less intrusive states like Texas and Florida.