Activision says it will end forced employee arbitration deals

Facing federal and state investigations and lawsuits by women who allege a hostile work environment, the CEO of Activision Blizzard Inc. said Thursday the Santa Monica game publisher would end forced arbitrations for sexual harassment and discrimination claims.

Bobby Kotick's decision could pave the way for other game publishers. The game industry has been accused of fostering an environment that was hostile to employees who were not straight and male.

Kotick, who has led the company for 30 years, promised in a letter to employees significant policy changes in investigating workplace conduct and proposed to take a significant pay cut: $62,500 in total compensation, if approved by the company's board. The company will increase the number of women and nonbinary hires by 50%, he wrote.

"For any Activision Blizzard employee who chooses not to arbitrate an individual claim of sexual harassment, unlawful discrimination or related retaliation arising in the future, the company will waive any obligation to do so," Kotick wrote.

The decision was a clear effort to put in the rearview mirror allegations that have bedeviled the company for several years. The U.S. Securities and Exchange Commission announced last month that it would investigate whether the company hid from investors allegations of workplace misconduct. After the SEC announcement, the company's chief legal officer left the company.

Genie E. Harrison of Genie Harrison Law in Los Angeles called Kotick's move a good one. Arbitration agreements have been effective at concealing systemic workplace conduct in a company, she said.

"The reality is, forced arbitration is a problem," said Harrison, who represents a class of women alleging similar allegations against game publisher Riot Games who staged a walkout over forced arbitration agreements.

Many companies, especially those in California, have been under pressure to get rid of forced employee arbitration agreements, but it requires a delicate balancing of stakeholders -- usually investors, employees and customers, some employment lawyers said.

"The company may be pulled in different directions trying to figure out how to satisfy each group because what its customers want is not necessarily the same thing its employees or shareholders want," Lauren Teukolsky of Teukolsky Law APC in Pasadena said. "Activision is trying to figure out what policy changes it can make so it can satisfy all three groups without sacrificing too much."

George C. Miller, a partner at Shustak Reynolds & Partners PC who specializes in employment law in a securities context, said he doubted Activision Blizzard's move would "cause some kind of sea change forcing other tech companies to exclude harassment and discrimination claims from arbitration."

The company is clearly trying to mitigate the bad press it's been receiving, Miller said.

Early Thursday, after the news of Kotick's letter broke, Activision Blizzard's stock price dipped, but then recovered in after-hours trading.

"There's no huge drastic movement here, despite the latest press," Miller observed. "If you watch what happens to the stock as these allegations continue to unfold --

and be resolved -- we ask ourselves: Does this only come down to the bottom line question, which is, is the company profitable? It'll be critical how the company responds and if it can position itself for success through cultural changes."