IBM Settles DEI Practices Allegations for $17 Million

IBM has agreed to pay approximately $17 million to the U.S. government to settle allegations regarding its diversity, equity, and inclusion (DEI) practices, which were claimed to violate federal anti-discrimination laws. The settlement, announced by Acting Attorney General Todd Blanche, marks the first resolution under the Department of Justice's (DOJ) newly established Civil Rights Fraud Initiative, aimed at addressing alleged discriminatory practices in organizations receiving federal contracts.

IBM to pay $17 million as settlement linked to anti-DEI probe — What was the tech major accused of?

The DOJ accused IBM of knowingly making false claims about its hiring and employment practices in federal contracts. Specifically, the government alleged that IBM employed a "diversity modifier" that tied bonus compensation to achieving demographic targets, which led to discriminatory practices based on race, color, national origin, or sex. The DOJ's claims included that IBM's hiring and promotion processes factored in protected characteristics, violating the False Claims Act. The company was also accused of limiting training and development opportunities to certain employees based on these characteristics.

New Tang DynastyIBM to pay $17 million as settlement linked to anti-DEI probe — What was the tech major accused of?CNN

Launched in May 2025, the Civil Rights Fraud Initiative aims to combat discrimination in federal contracting. The DOJ's memorandum emphasized that organizations must not only certify compliance with civil rights laws but also refrain from engaging in discriminatory practices, particularly those associated with DEI programs. The initiative builds on the False Claims Act, which allows the government to recover funds from contractors that knowingly submit false claims regarding compliance with federal regulations.

New Tang Dynasty

While IBM has denied engaging in unlawful conduct, the company acknowledged its cooperation with the investigation. The settlement agreement states that it is "neither an admission of liability by IBM nor a concession by the United States that its claims are not well-founded." IBM undertook voluntary remedial measures, including the modification or termination of certain programs that were under scrutiny.

IBM to pay $17 million as settlement linked to anti-DEI probe — What was the tech major accused of?

Critics of DEI initiatives, including former President Donald Trump, have argued that such programs can be discriminatory against groups like white individuals and men. The Trump administration had previously issued executive orders aimed at dismantling DEI offices and practices within federal agencies and contractors. Blanche reiterated the DOJ's stance, stating, “Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI.”

CNN

The settlement underscores the DOJ's commitment to enforcing anti-discrimination laws and holding organizations accountable for compliance. It also reflects a broader national conversation about the role of DEI initiatives in the workplace and their implications for merit-based hiring and promotion practices. The outcome of this case may set a precedent for future investigations into similar practices across various sectors.

New Tang Dynasty

• “Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI,” — Todd Blanche, Acting Attorney General

CNN

• “Merit drives promotion and opportunity. Not someone’s sex or race,” — Stanley Woodward, Associate Attorney General

New Tang Dynasty

• “The Nation’s anti-discrimination laws are clear and reflect our basic commitment that opportunity, compensation, and advancement should turn on merit and performance, and not immutable characteristics,” — Brenna Jenny, Deputy Assistant Attorney General

New Tang Dynasty