The California Civil Rights Department (CRD) has reached a settlement with Microsoft over its alleged discrimination against workers based on their use of protected leave.

The settlement is for $14.425 million and will be used to resolve the allegations of retaliation and discrimination reported by workers against them using leave including parental, disability, pregnancy, and family care leave.

It is still subject to approval by the court.

Both state and federal law prohibits employers from interfering with these types of leave. In addition to paying the settlement, Microsoft has agreed to take steps to prevent future discrimination and to provide monetary relief to those employees affected between 2017 and 2024.

“Whether it’s to look after a newborn child or take care of your own health, workers generally have the right to take time off without worrying about consequences at work,” said CRD Director Kevin Kish.

“By allegedly penalizing employees for taking protected forms of leave, Microsoft failed to support workers when they needed to care for themselves or their families. The settlement announced today will provide direct relief to impacted workers and safeguard against future discrimination at the company. We applaud Microsoft for coming to the table and agreeing to make the changes necessary to protect workers in California.”

The settlement is the result of a multi-year investigation into Microsoft over the claims. The original complaint filed by the CRD argued that women and people with disabilities were overrepresented in the group of workers taking protected leave and that they faced unlawful retaliation and discrimination in compensation and promotion opportunities. An example offered is lower bonuses and unfavorable performance reviews which limited the employees' eligibility for merit increases, stock awards, and promotions.

The settlement will be split with $14.2m to be used as direct relief for workers, and $225,000 in costs associated with the department's enforcement efforts.

Microsoft will also have to retain an independent consultant to make recommendations on its personnel policies and practices and to ensure that workers know how to raise complaints.

In addition, Microsoft will report annually via the independent consultant on its compliance with the settlement.

In June 2024, Microsoft was sued by German high-performance computing (HPC) vendor ParTec over alleged patent infringement in its Azure AI platform.

The company is also part of several ongoing anti-trust investigations, including two by the Federal Trade Commission. The first commenced in January 2024 and is looking into the AI industry including Amazon, Alphabet, Microsoft, Anthropic, and OpenAI, focusing on the investments and partnerships being formed.

The second probe focuses on Microsoft, OpenAI, and Nvidia and is looking at the companies' conduct and influence on the artificial intelligence industry.

Across the pond, Microsoft is part of a UK Competition and Markets Authority investigation into the cloud computing market which kicked off in October 2023.

Prior to this in 2022, Microsoft was the target of an antitrust campaign, led by OVHcloud and backed by cloud trade association CISPE which includes Amazon. A complaint was filed with the European Competition watchdog. In May 2022, Microsoft agreed to adjust the terms of its cloud computing service to avoid a full antitrust investigation.