Activision Blizzard CEO Bobby Kotick speaks at the CNBC Evolve conference November 19th in Los Angeles.

Jesse Grant | CNBC

Microsoft-owned Activision Blizzard has agreed to settle a case from a California state agency that alleged the video game publisher discriminated against women, including denying them promotion opportunities and paying them less.

California’s Civil Rights Department said in a statement on Friday that as part of a proposed settlement agreement, Activision Blizzard will pay nearly $55 million to provide relief to female employees and contractors from October 2015 to December 2020 and cover legal fees. About $46 million of the total will go to the fund for affected women, the agency said in the statement.

The news comes almost two years after Activision Blizzard settled a case from the U.S. Equal Employment Opportunity Commission, which pointed to sexual harassment, pregnancy discrimination and retaliation. As a result, the company agreed to form an $18 million fund to pay victims.

In 2021, the agency, then known as the Department of Fair Employment and Housing, filed a suit against the company, presenting allegations of sexual harassment, discrimination and retaliation. Months later, the Wall Street Journal reported that while Activision Blizzard CEO Bobby Kotick was aware of allegations of misconduct inside the company, he didn’t share all relevant information with its board.

Shares fell, and Microsoft subsequently began talks to acquire Activision Blizzard, the maker of Call of Duty.

The $69 billion deal closed in October after regulators in the U.S. and Europe looked carefully at it. The Federal Trade Commission argued in San Francisco appellate court last week that a federal judge made mistakes in rejecting the regulatory agency’s attempt to stop the companies from completing the transaction.

The Los Angeles County Superior Court must approve Activision’s settlement with the state agency, according to the statement. The agency will file a new complaint that excludes prior harassment allegations, according to the proposed settlement agreement, which CNBC viewed.

The agreement would require Activision to keep up efforts around inclusion of underrepresented people in recruiting. Except when compensation is non-negotiable, the company would have to tell job applicants in writing at the start of hiring and promotion processes that they can negotiate their pay.

“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,” Activision said in a statement to CNBC.

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