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The agreement resolves a more than three-year investigation over claims that the Santa Monica, California-based company discriminated against female employees when it came to pay and promotions, the department said in a statement.

The bulk of the settlement money will go to employees who faced discrimination at Snapchat Inc., California officials said.

“In California, we’re proud of the work of our state’s innovators who are a driving force of our nation’s economy,” said Kevin Kish, director of California's civil rights agency. “This settlement with Snapchat demonstrates a shared commitment to a California where all workers have a fair chance at the American Dream. Women are entitled to equality in every job, in every workplace, and in every industry.”

Snapchat Inc. said it disagrees with the agency's claims but that it decided to settle to avoid costly and lengthy litigation.

“We care deeply about our commitment to maintain a fair and inclusive environment at Snap, and do not believe we have any ongoing systemic pay equity, discrimination, harassment, or retaliation issues against women," the company said in a statement.

Snapchat Inc. grew from 250 employees in 2015 to over 5,000 in 2022. But the growth didn't translate to advancement for female employees who “were told to wait their turn, were actively discouraged from applying for promotions, or lost promotion opportunities to less qualified male colleagues,” California officials said.

In particular, women in engineering roles, which account for about 70% of Snap’s workforce, found barriers when trying to advance from entry-level positions, according to the complaint.

California’s civil rights agency also said in its lawsuit that women were sexually harassed and that when they spoke up, they faced retaliation that included negative performance reviews and termination. Male managers routinely promoted male employees over more qualified women, the agency said.

“Women were told, both implicitly and explicitly, that they were second-class citizens at Snap,” the agency said in its lawsuit.

The settlement will require the company to hire an independent consultant to evaluate its compensation and promotion policies and retain an outside auditor of its sexual harassment, retaliation, and discrimination compliance. The company will also have to train its staff on preventing discrimination, retaliation and sexual harassment in the workplace, officials said.

Snapchat Inc. also agreed to provide information to all employees about their right to report harassment or discrimination without fear of retaliation.