IBM Agrees to Pay Government $17 Million in DEI Settlement

In the first outcome of the U.S. Department of Justice’s Civil Rights Fraud Initiative, IMB has agreed to about $17 million to settle charges related to the company’s diversity, equity, and inclusion (DEI) practices.

“Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI,” said Acting Attorney General Todd Blanche in a statement. He said the initiative, launched about a year ago, is meant to “root out this misconduct, hold offenders accountable, and end this practice for good.”

The Trump administration has repeatedly sought to rid DEI practices from public and private companies, government, and educational institutions since taking office. The Justice Department has launched numerous investigations of companies under the False Claims Act, which allows to recover funds from fraud. About $8.2 million of the total will be paid in restitution, the DOJ said.

IBM’s settlement with the DOJ, announced April 10, focuses on its federal contracts. The DOJ said these contracts require contractors to comply with anti-discrimination rules. DOJ said IBM allegedly failed to comply and “knowingly maintain practices that the United States contends were discriminatory employment practices,” when it allegedly made employment decisions with race, color, national origin, or sex in mind – including the use of a “diversity modifier” that affected how bonuses were achieved.

“When a company accepts federal funding while engaging in practices that sort, prefer, or disadvantage employees on the basis of race or sex, the company is stepping outside the conditions under which the government agreed to contract with them, and we will hold them accountable,” added Deputy Assistant Attorney General Brenna E. Jenny.

IBM could not immediately be reached for comment. The settlement is not an admission of liability by IBM, and the company denies the conduct, according to the agreement.