California’s Civil Rights Department has reached a settlement with Activision Blizzard that will see the company pay tens of millions of dollars in damages to women for unfair pay and treatment — but, as part of the settlement, the CRD has dismissed its own allegations of a “frat boy” culture of widespread and systemic sexual harassment at the company.
According to the CRD’s news release, Activision Blizzard will pay almost $55 million in damages to settle the suit, of which $45.75 million will be used to directly compensate women who were denied promotion opportunities, paid less than men for similar work, or otherwise discriminated against at the company. The remainder will cover legal costs, with any excess going to relevant charities.
Activision Blizzard — which, since the lawsuit was filed in July 2021, has been acquired by Microsoft — will also be required to retain an independent consultant to review its compensation and promotion policies, and to “continue its efforts” to improve representation in its workforce.
But the settlement — which still has to be approved by a court — has also required the CRD to make a major climbdown. Its suit made alarming claims about a “pervasive ‘frat boy’ workplace culture” at Activision Blizzard and “constant sexual harassment” of female employees there. The allegations were the focus of media coverage at the time and prompted a reckoning within the company — resulting in the departure of many senior staffers — and in the wider industry. The CRD has now withdrawn these claims.
“No court or any independent investigation has substantiated any allegations that there has been systemic or widespread sexual harassment at Activision Blizzard,” the text of the agreement reads. The settlement also clears Activision Blizzard’s board of directors and CEO Bobby Kotick of acting “improperly with regard to the handling of any instances of workplace misconduct.”
The withdrawal of this element of California’s suit is likely to raise some eyebrows, given the storm of controversy that it created and the many heads that rolled at the company as it cleaned house in the following months.
In a statement to Polygon, Activision Blizzard welcomed the settlement and underlined the withdrawal of the sexual harassment claims, which a spokesperson called “inflammatory.” Here’s the full text of Activision Blizzard’s statement:
We are gratified that we have reached an agreement with the California Civil Rights Department (CRD) today, as the CRD has now announced in a press statement. We appreciate the importance of the issues addressed in this agreement and we are dedicated to fully implementing all the new obligations we have assumed as part of it,” the company said. “We want our employees to know that, as the agreement specifies, we are committed to ensuring fair compensation and promotion policies and practices for all our employees, and we will continue our efforts regarding inclusion of qualified candidates from underrepresented communities in outreach, recruitment, and retention.
We are also gratified that the CRD has agreed to file an amended complaint that entirely withdraws its 2021 claims alleging widespread and systemic workplace harassment at Activision Blizzard. As the CRD acknowledged explicitly in the agreement, “CRD is filing along with a Proposed Consent Decree a Second Amended Complaint that withdraws, among other allegations and causes of action, the Fifth Cause of Action – “Employment Discrimination – Because of Sex – Harassment.” As the CRD also expressly acknowledged in the agreement, “no court or independent investigation has substantiated any allegations that there has been systemic or widespread sexual harassment at Activision Blizzard.” In addition, the CRD has acknowledged that no court or independent investigation substantiated any allegations that “Activision Blizzard’s Board of Directors, including its Chief Executive Officer, Robert Kotick, acted improperly with regard to the handling of any instances of workplace misconduct.”
This isn’t the first time Activision Blizzard has reached a multimillion-dollar settlement with a government body over equal opportunities in the workplace. In September 2021, it committed to creating an $18 million compensation fund as part of an agreement with the Equal Employment Opportunity Commission. And, in a tangentially related case, the company agreed to pay $35 million in February 2023 to settle the Securities and Exchange Commission’s charges that it broke government rules on whistleblower protection and investor disclosure related to its handling of these cases.