Based on Gacek's answer, and after analyzing @WebSeed's example with the WAVE browser extension, I've come up with the following version that chooses black or white text based on contrast ratio (as defined in W3C's Web Content Accessibility Guidelines (WCAG) 2.1), instead of luminance.
This is the code (in javascript):
// As defined in WCAG 2.1
var relativeLuminance = function (R8bit, G8bit, B8bit) {
var RsRGB = R8bit / 255.0;
var GsRGB = G8bit / 255.0;
var BsRGB = B8bit / 255.0;
var R = (RsRGB <= 0.03928) ? RsRGB / 12.92 : Math.pow((RsRGB + 0.055) / 1.055, 2.4);
var G = (GsRGB <= 0.03928) ? GsRGB / 12.92 : Math.pow((GsRGB + 0.055) / 1.055, 2.4);
var B = (BsRGB <= 0.03928) ? BsRGB / 12.92 : Math.pow((BsRGB + 0.055) / 1.055, 2.4);
return 0.2126 * R + 0.7152 * G + 0.0722 * B;
};
var blackContrast = function(r, g, b) {
var L = relativeLuminance(r, g, b);
return (L + 0.05) / 0.05;
};
var whiteContrast = function(r, g, b) {
var L = relativeLuminance(r, g, b);
return 1.05 / (L + 0.05);
};
// If both options satisfy AAA criterion (at least 7:1 contrast), use preference
// else, use higher contrast (white breaks tie)
var chooseFGcolor = function(r, g, b, prefer = 'white') {
var Cb = blackContrast(r, g, b);
var Cw = whiteContrast(r, g, b);
if(Cb >= 7.0 && Cw >= 7.0) return prefer;
else return (Cb > Cw) ? 'black' : 'white';
};
A working example may be found in my fork of @WebSeed's codepen, which produces zero low contrast errors in WAVE.