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Tencent’s Riot Games Pressed to Let Workers Aid Bias Probe (2)

Aug. 16, 2021, 7:24 PM; Updated: Aug. 16, 2021, 10:23 PM

A California agency accused Riot Games Inc., a video-game unit of Tencent Holdings Ltd., of using secret agreements to prevent employees from speaking with regulators about alleged sexual harassment, and asked a court to force the company to inform workers of their rights to speak about workplace bias.

The California Department of Fair Employment and Housing on Monday asked a California state court to compel Riot Games, which makes popular games including League of Legends, to send a notice informing workers of their right to cooperate with the state investigation. The agency said it opened an investigation into allegations of sexual harassment, sex discrimination, and sexual assault at the company in October 2018.

A class of female employees, who said Riot denied them equal pay, stifled promotions, and subjected them to sexual harassment, filed suit in November 2018. According to their complaint, a Riot email chain rated the company’s “Hottest Women Employees.”

In 2019, Riot announced it had reached a class settlement, as well as secret settlements with approximately 100 women who waived their claims and rights without any notice of DFEH’s pending enforcement actions, the agency told the court. DFEH stepped in to block the proposed $10 million class settlement, which it said would have grossly undercompensated female employees for claims that could have been worth as much as $400 million.

That settlement was withdrawn, but the secret settlements weren’t, and their use has apparently continued, the agency told the Los Angeles Superior Court Monday.

DFEH said it attempted to obtain copies of the settlement agreements, and while the court ordered production of the settlements in January 2021, Riot delayed production until April.

Court Order Sought

According to a Monday statement from DFEH, the agency was alarmed by language in the settlement and separation agreements that suggested employees couldn’t speak with the state about sexual harassment and other violations. The court ordered Riot to issue a corrective notice, but the company hasn’t yet done so, DFEH said.

The parties agreed on a corrective notice in June which notifies employees that they have the right to speak with DFEH about their Riot employment regardless of non-disparagement and nondisclosure terms in the settlement agreements, the agency said.

According to the Monday filing, Riot used the process of selecting a third-party administrator to deliver the notices to attempt to extract a commitment that DFEH wouldn’t directly contact any of the employees on the list.

The agency asked the court to order Riot to provide the settlement contact list to the administrator for issuance by Aug. 19, and to clarify that DFEH has the right to speak with current and former Riot employees, and that the company can’t interfere with the agency’s efforts to “exercise its prosecutorial rights.”

A Riot Games spokesperson told Bloomberg Law Monday that the corrective notices are to confirm that Riot’s severance agreements “have never in any way prohibited speaking to government agencies.”

The company’s standard severance agreement includes a whistleblower protection clause informing employees of their rights to report possible violations of state and federal law, and their right to do so without authorization from or notice to Riot, the spokesperson said.

The superior court made clear sending these notices in no way indicates any judgment against Riot on the DFEH allegations, Riot added.

The DFEH filing comes on the heels of another agency investigation into the gaming world. In July, the agency sued World of Warcraft-maker Activision Blizzard Inc., alleging the company encourages a “frat boy” culture where female workers face sexual harassment, unequal pay, and retaliation.

According to the agency complaint, female employees were subject to sexual and other derogatory comments, and inappropriate behavior. The suit alleged women received lower pay, were promoted more slowly than male counterparts, and fired more quickly. The agency is seeking an injunction on behalf of employees, as well as penalties under the California Equal Pay Act, including unpaid wages.

Gibson Dunn & Crutcher LLP represents Riot.

The case is McCracken v. Riot Games Inc., Cal. Super. Ct., No. 18STCV03957, 8/16/21.

—With assistance from Paige Smith

(Clarifies timing of DFEH investigation and class suit.)

To contact the reporter on this story: Maeve Allsup in San Francisco at mallsup@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Meghashyam Mali at mmali@bloombergindustry.com

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