Dive Brief:
- IBM will pay more than $17 million to settle U.S. Department of Justice allegations that the company’s diversity, equity and inclusion programs violated the False Claims Act and did not comply with antidiscrimination requirements for federal contractors, the agency announced Friday.
- Per the settlement agreement, DOJ alleged that IBM knowingly violated Title VII of the 1964 Civil Rights Act and discriminated against applicants and employees on the basis of race, color, national origin or sex. For example, the agency claimed that IBM’s compensation practices caused employees to take these protected categories into account when making employment decisions.
- DOJ noted that the agreement is not an admission of liability by IBM and credited the company for cooperating with its investigation. “IBM is pleased to have resolved this matter,” an IBM spokesperson said in an email. “Our workforce strategy is driven by a single principle: having the right people with the right skills that our clients depend on.”
Dive Insight:
The IBM settlement is the latest in a long line of actions taken by the Trump administration against corporate DEI programs. Attorneys who previously spoke to HR Dive said the DOJ might investigate federal contractors’ programs for violating the False Claims Act, which governs situations in which federal fund or contract recipients knowingly violate antidiscrimination laws despite certifying their compliance with those laws.
Several practices identified in the settlement agreement have also been highlighted by employer-side legal counsel as being targets for federal regulators. These include DOJ’s reference to IBM’s alleged use of “diverse interview slates” and “diverse sourcing” practices, the former of which DOJ specifically called unlawful in a 2025 guidance.
The Justice Department also claimed that IBM developed race- and sex-based demographic goals for business units and took protected characteristics into account when making decisions to achieve those goals. DOJ further claimed that IBM offered certain training, partnership, mentorship and leadership development opportunities to groups of employees limited by such characteristics.
“Merit drives promotion and opportunity. Not someone’s sex or race,” Associate U.S. Attorney General Stanley Woodward said in the agency’s press release. “Today’s settlement proves this Department’s commitment to ensure companies are not using taxpayer funded work to further woke unconstitutional practices in American workplaces.”
DEI professionals should seek to preserve equal opportunity talent strategies by ensuring that they are grounded in lawful practices, sources previously told HR Dive. Among other things, that can include documenting legitimate business justifications for DEI initiatives and working with legal counsel to reduce risk.
