State drops sexual harassment case against Activision Blizzard

More than two years after a California state agency accused video game maker Activision Blizzard of fostering a work culture of sexual harassment and discrimination against female employees, the agency Friday withdrew its allegations in a settlement with the company.

As part of the settlement, Activision agreed to set aside as much as $47 million to address accusations of pay disparity and discrimination in promotions for female employees. In total, the company agreed to pay about $54 million in the settlement.

In the agreement, the California Civil Rights Department and Activision Blizzard said that “no court or any independent investigation has substantiated any allegations” about “systemic or widespread sexual harassment at Activision Blizzard.” The settlement also said an investigation had not found evidence of wrongdoing by Activision's board, its executives or its CEO Robert Kotick.

The move ends a longrunning dispute between the state of California and Activision, which makes video games including “Call of Duty,” “Guitar Hero” and “World of Warcraft.” The company had repeatedly said the accusations about its workplace culture were false.

The case — and the pall it created over the company when it was filed in 2021 — was a factor that led Microsoft to seek to buy Activision because its stock had fallen. Microsoft completed the blockbuster $69 billion deal for Activision this year.

The original complaint from the California Civil Rights Department, which was then called the California Department of Fair Employment and Housing, contended that the state had conducted an investigation into Activision and found that it “fostered a pervasive `frat boy' workplace” and that female employees were “subjected to constant sexual harassment.”

At the time, Activision said the complaint included “distorted and, in many cases, false, descriptions” and was “irresponsible behavior from unaccountable state bureaucrats.”

The settlement agreement is subject to court approval and is expected to be filed in court early next week.

The settlement, signed by both parties, said Gilbert Casellas, a former chair of the Equal Employment Opportunity Commission, had conducted a review of Activision and found “there was no widespread harassment or recurring pattern or practice of gender harassment” at the company.

Activision agreed to set aside as much as $47 million to pay women who were employees or contract workers at the company from 2015 to 2020 who said they had received inequitable pay.

One of the California agency's own expert witnesses had testified that when taking into account the seniority of the roles that women at the company held, he did not find a pay disparity. He said there was a disparity when not taking into consideration the rank of the employees.

Activision also agreed to hire an outside consultant to evaluate compensation, promotion policies and training materials as part of the settlement.