Microsoft has reached a $14.4m settlement with California’s Civil Rights Department (CRD) to resolve claims that it discriminated and retaliated against women and disabled workers when they took federally protected leave for themselves or to take care of a family member.

The CRD’s multi-year investigation found that workers at Microsoft in California experienced disadvantages in pay and promotion opportunities when they took these types of protected leave.

Employees who took protected leave would receive lower bonuses and unfavorable performance reviews, the department said in its complaint, which was filed on July 1 in Santa Clara County. This, in turn, affected their eligibility for merit increases, stock awards and promotions.

“We applaud Microsoft for coming to the table and agreeing to make the changes necessary to protect workers in California.”

Kevin Kish, Director, CRD

When Microsoft managers awarded annual bonuses, stock awards, or merit increases they did not consider time on protected leave as time where employees were actively working — although other forms of leave were not discounted, according to the complaint.

Outside consultant and training imposed

As part of the settlement, Microsoft agreed to take a number of steps to prevent future discrimination and provide monetary relief to employees who used protected leave at the company in California between 2017 and 2024.

Besides the financial penalty, the company will retain an independent consultant to make recommendations on personnel policies and practices and report annually on compliance with the agreement. And, for the duration of the consent decree, Microsoft will require all direct and second-level managers for any California employee to attest during the same calendar year that they have completed specific training to prevent and detect future instances of this type of discrimination.

“The settlement announced today will provide direct relief to impacted workers and safeguard against future discrimination at the company,” CRD director Kevin Kish said in CRD’s press release about the settlement. “We applaud Microsoft for coming to the table and agreeing to make the changes necessary to protect workers in California.”

“Microsoft is committed to an environment that empowers our employees to take leave when needed and provides the flexibility and support necessary for them to thrive professionally and personally,” a company spokesperson told news outlets.

The percentage of Microsoft executives who are women, according to its annual DEI report, is 29.1%.