Activision Blizzard settles discrimination lawsuit for a fraction of its yearly earnings

Less than a day after a lawsuit alleging discrimination and sexual harassment was brought against it by a federal agency, Activision Blizzard has agreed to settle the case for $18 million. That’s less than a half-percent of Activision Blizzard’s total 2020 revenue.

The Diablo and Call of Duty maker, which denied any wrongdoing, will create an $18 million restitution fund for affected employees as part of the agreement. It will also comply with antidiscriminatory laws and ensure its workplace is free from harassment, discrimination, and retaliation practices. Any money that isn’t claimed from the $18 million fund will be donated to charities dedicated to the advancement of women in gaming and tech sectors and otherwise used to improve upon Activision Blizzard’s internal programs to promote inclusion, gender equality, and diversity.

Last year, Activision Blizzard earned $8.1 billion in revenue, putting the total settlement number at 0.22 percent of its total 2020 earnings.

A three-year investigation

The agreement came hours after the US Equal Employment Opportunity Commission had brought a legal case September 27 against the company in the US District Court of Central California. The suit had claimed that female employees had been subjected to sex-based discrimination and harassment, including pregnancy and wage discrimination compared to male employees, while victims who complained about discrimination were subject to dismissal. The EEOC’s case was just the latest legal development for the company, which is currently embroiled in several separate, ongoing legal battles that have cropped up over the summer.

The EEOC’s filing was the result of an investigation the governmental watchdog organization began in September 2018 over allegations dating back to September 2016. Employees had allegedly suffered sexual harassment which was “severe or pervasive to alter the conditions of employment.” The EEOC also alleged that Activision Blizzard failed to take action or provide relief against harassment when they complained, and that employees who complained about discrimination due to pregnancy were subject to “discharge or constructive discharge.” The agency notified Activision Blizzard of its findings in June.

While the filing confirms that Activision Blizzard was cooperative with its nearly three-year investigation, no adequate agreement to eliminate workplace harassment and offer appropriate relief to affected employees could be reached after “extensive conciliation discussions.”

In addition to creating the $18 million fund, terms of the settlement also require Activision Blizzard to overhaul its company practices, policies, and training procedures on discrimination, harassment, and retaliation and maintain compliance with the agreement, and will be subject to future audits from the EEOC.

Legal issues ahead

While Activision Blizzard has agreed to resolve the EEOC’s lawsuit, the company still faces mounting legal problems from a number of parties. In June, the California State Department of Fair Employment and Housing sued the company for further allegations of sexual harassment and sexual discrimination—accusations that Activision Blizzard executives claimed were “distorted and in many cases false.”

The corporate response led to an internal company petition rebuking leadership and, in July, an employee walkout in protest. Activision Blizzard was later hit with a class-action lawsuit filed in August from shareholders who said they were “economically damaged” by executives failing to disclose information related to the California state harassment lawsuit, causing “artificially inflated” share prices.

Earlier this month, it was revealed that the Securities and Exchange Commission has started an investigation of its own. The commission is looking into how the company has dealt with its recent allegations of misconduct and discrimination. Multiple Activision Blizzard employees, including Blizzard President J. Allen Brack and chief legal officer Claire Hart, have departed the company since August.