On Friday, IBM reached a settlement with the federal government, agreeing to remit around $17 million to settle allegations concerning improper Diversity, Equity, and Inclusion (DEI) practices.
The agreement was announced by Acting Attorney General Todd Blanche in a press release.
The Department of Justice contended that the New York-based tech firm “knowingly” furnished “false statements” regarding its hiring and employment methods within federal contracts, as outlined in the settlement. IBM allegedly identified “diverse” candidates for recruitment or promotion while simultaneously establishing demographic targets based on race and gender.
“IBM is pleased to resolve this matter,” an IBM spokesperson conveyed to CNN via email. “Our workforce strategy is built upon a single imperative: having the right individuals with the competencies our clients rely upon.”
IBM had refuted engaging in discriminatory or unlawful DEI activities. The resolution explicitly noted that the settlement “does not constitute an admission of liability by IBM nor a concession by the United States that its claims lack merit.”
The Trump administration had intensified scrutiny over DEI initiatives across both public and private sectors the previous year, encompassing federal recruitment and contracting. Four days into Donald Trump’s second term, a directive was issued to federal agencies mandating the dismantlement of all DEI offices and positions.
In May 2025, the Department of Justice began leveraging the False Claims Act to target college diversity efforts, asserting that IBM, as a contractor, violated the statute by supporting “practices that the U.S. deems discriminatory in employment,” according to a statement released Friday.
“Racial discrimination is illegal, and federal contractors cannot circumvent the law by repackaging it as DEI,” Blanche stated in the Friday press release. “The Department has initiated the Civil Rights Fraud Initiative to eradicate this misconduct, hold wrongdoers accountable, and permanently cease this behavior.”
The False Claims Act dates back to the Civil War era and empowers the government to recoup funds up to three times the actual damages, in addition to penalties, according to the Department of Justice.
This legislation also permits private citizens to file lawsuits alleging fraud against the government and to retain a portion of the recovered federal funds.
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