Entertainment company Riot Games recently settled a multi-year-long gender discrimination class-action lawsuit with the California Department of Fair Employment and Housing (DFEH).

After all is said and done, the software company will pay $100 million to settle the claims of gender discrimination, including unequal pay and sexual harassment, among other misconduct. Some $80 million will be awarded to female employees who worked at the company between November 2014 and the present day. The Washington Post cites that “at least 2,300 workers are eligible for part of the $80 million settlement, with those who started earlier or worked at the company longer receiving a larger allocation of the funds.”

The remaining $20 million will be paid to plaintiff lawyers and any associated legal fees. Included in the total payout are also $4 million in penalties for violating California’s Equal Pay Law.

In an official statement released by the company, Riot said “While we’re proud of how far we’ve come since 2018, we must also take responsibility for the past. We hope that this settlement properly acknowledges those who had negative experiences at Riot and demonstrates our desire to lead by example in bringing more accountability and equality to the games industry.”

The $100 million settlement is not the end of Riot Games’ agreement. A third-party consultant will monitor the company over the next three years to ensure it’s adequately handling HR complaints and compensating all genders equally. 

The company must also make strides to enhance its diversity, equity, and inclusion (DEI) programs. According to a DFEH press release, the company will:

  • Create a $6 million reserve for each year of the three-year time frame to make pay adjustments and fund DEI programs
  • Hire and pay for an independent DFEH-approved consultant to assist with gender pay equity analysis and remedy unexplainable pay disparities that cannot be explained by bona fide, legitimate reasons for three years 
  • Produce 40 full-time engineer, quality assurance, or art-design roles to qualified, protected class members who originally were temporary, contract workers.

Riot’s gender discrimination claim started in 2018 when two former employees came forth asserting the company harbored gender-based discrimination, unequal pay, and overlooked female employees for career advancement opportunities. The suit contended that Riot violated California’s Equal Pay Act and retaliated against female employees who voiced their complaints. 

In 2019, Riot agreed to settle the lawsuit at $10 million, but California’s DFEH barred the agreement, saying the victims deserved more and could receive up to $400 million. The new $100 million settlement and workplace changes come following the completion of an investigation by the DFEH and California Division of Labor Standards Enforcement (DLSE).

Riot’s settlement comes amidst a reckoning in the gaming industry as a whole. The DFEH recently sued gaming giant Activision Blizzard following a two-year investigation. In the DFEH’s suit, it asserts that Activision Blizzard harbors a “frat boy” culture, where sexual harassment, unequal pay, retaliation, and other gender-based discrimination run rampant. 

Employers watching from the sidelines should note that the Riot settlement is the DFEH’s first case involving claims under California’s SB 973 pay data reporting law. If the agency’s recent enforcement activity is any indicator of how it will carry out gender discrimination and unequal pay, employers would be wise to be proactive. 

With the agency already issuing SB 973 non-compliance notices to employers, conducting an internal pay equity audit is one of the best exercises you can do for your organization this year. 

Proactively identifying any unlawful gender and race/ethnicity wage gaps and correcting them on your own accord will not only help you prepare for the annual SB 973 pay data reporting requirements but will also communicate to key stakeholders your commitment to enhancing workplace equity. This will in turn help you foster stronger workplace culture, draw in and retain top talent, and ultimately increase business performance.

From a pay equity and DEI perspective, the New Year is off to a strong start. Now is the time to achieve pay equity. If your organization needs assistance implementing a DEI program, conducting a pay equity audit, or communicating progress to key stakeholders, then download the research report we recently sponsored, Creating a Culture of Diversity, Equity, and Inclusion, conducted by Harvard Business Review. 

Downlaod Trusaic and HBR Research Report

Organizations looking to disclose pay equity, diversity, and inclusion data information should do so within an ESG reporting framework. Download our white paper, DEI in ESG Reporting to learn about the different standards you can leverage for sharing your progress.

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