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Activision Awaits Crucial Ruling on Scope of Sex Harassment Suit

Feb. 15, 2022, 10:00 AM

A judge is set to decide whether a lawsuit against Activision Blizzard Inc. over alleged sexual harassment and discrimination can include temporary workers who were not hired directly by the game maker, a ruling that will determine the scope of the suit and the potential financial fallout for the company.

California’s Department of Fair Employment and Housing brought suit against Activision in July, and then filed an amended complaint in late August, adding “contingent or temporary workers” to its claims.

Los Angeles Superior Court Judge Timothy P. Dillon will hear oral arguments on Activision’s bid to exclude those workers from the lawsuit on Tuesday, before ruling on the appropriate scope of the case.

Dillon’s decision will have wide-ranging implications for the broader tech workforce, where temporary workers are a growing subset, said industry watchers.

“Tech companies are very risk-averse when it comes to this type of joint-employment litigation,” said Samantha Gordon, senior vice president of advocacy and organizing at Tech Equity Collaborative.

“People are paying attention to this,” Gordon added. “It will raise their hackles around this issue and send a very important signal, especially if DFEH can put penalties to Activision for this behavior, and show there’s accountability for worker harm.”

Question of Notice

Workers hired through a staffing agency typically aren’t protected by state and federal law the way direct employees are, said Nathan Gibson, senior director of risk management at MBO Partners, a management operating platform for independent workers. And it’s unusual for non-employee workers to be included in harassment litigation, he explained.

“But temp and contract workers often face the same types of issues as employees,” he said.

Joint-employer liability—where companies share responsibility for workplace violations at affiliated businesses—has been a hotly contested labor and employment law issue in recent years. At the federal level, several appeals courts have ruled that staffing agencies and their client companies can be jointly liable for discrimination and harassment against contingent workers.

The DFEH, for its part, told the court that female contract workers were subjected to the same company-wide hostile work environment, including sexual harassment, assault, and discrimination, as full-time employees.

Contingent workers were always within the legal scope of DFEH’s investigation, and the amended complaint “simply clarified facts that were already alleged in its administrative complaints, investigated in its discovery, and supported by the law,” it said in a Feb. 1 filing.

Activision is the joint employer of those workers, and the allegations outlined in the lawsuit concern events that occurred at Activision’s offices and events, the filing continued.

Activision, though, argues DFEH failed to provide proper notice that its litigation would cover contingent workers.

PODCAST:Listen to Maeve discuss the details of some of the litigation against Activision

State law requires the agency to give notice about the particular class it suspects was subject to violations of the Fair Employment and Housing Act, but when DFEH told Activision in 2018 of its intent to investigate, it didn’t indicate the investigation would extend to contingent or temporary workers, Activision argued in a Feb. 7 filing.

Because DFEH didn’t notify Activision in writing that it intended to pursue claims on behalf of contingent workers, either in pre-suit investigation notices or the initial complaint, it can’t expand the case to include them in the amended filing, the company said.

Second Bite At The Apple?

DFEH’s complaints lay out several specific allegations of female employees experiencing harassment and discrimination, but the agency failed to include any specifics about the treatment of contracted workers, said Denis Kenny, a partner at Scherer Smith & Kenny LLP in San Francisco, who is not affiliated with the case.

“If it’s true that DFEH went through two years of investigation and never mentioned that information about contingent workers was also needed, then if I’m the judge I would have a hard time accepting that the agency should now get a second bite at the apple without having to file a new complaint,” he said.

And if DFEH is intending to argue Activision is a joint employer of these workers, then it seems to be missing a key step: proving a joint-employment relationship, he said.

When filing the amended complaint, DFEH should have identified which staffing agencies were at play, and provided facts about who controlled terms of employment for these workers, Kenny continued.

Naming the agencies employing workers is also good strategy, he explained. “That way, if there’s going to be any finger-pointing and fighting, it’s among all of those defendants as they argue about who is responsible for what.”

Impact of Ruling

Kenny said the judge is unlikely to completely dismiss contingent workers at this stage.

“In California, it’s very rare to have a demurrer sustained without leave to amend,” he said. “The judge will likely give the DFEH the opportunity to do some discovery and add facts and evidence beyond just saying that these workers are employees within the definition.”

If Dillon sides with DFEH, it could present a problem for many employers in the state who must pay greater attention to conditions for contract workers, said Dave DeSario, director of nonprofit organization Temp Worker Justice.

The system of temp work and subcontracting makes the inequities highlighted by the Activision lawsuit worse, DeSario said.

“The image that we have of working in tech is the image of the full-time employee,” he said. “That’s what contingent workers are chasing, but most of them won’t get there.”

Gordon also said the Activision-DFEH dispute has brought to light industry-wide problems for temporary workers.

“Contracting, at least for tech companies writ large, seems to be one of the ways that certain groups are locked out of tech, including women, people of color, and non-binary folks,” she said.

“All of the things we know to be true about power dynamics in the workplace exist in tech, and when there’s a workforce that’s disproportionately women or people of color, and there’s a power imbalance, things just get worse.”

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

To contact the editors responsible for this story: Meghashyam Mali at mmali@bloombergindustry.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com