IBM Settles Diversity Program Allegations for $17 Million

IBM will pay $17 million to the Department of Justice to settle claims that its diversity, equity, and inclusion (DEI) programs are illegal and discriminatory.

This marks the first agreement under the Civil Rights Fraud Initiative, a division launched last year by the Trump administration aimed at scrutinizing DEI programs under Civil War-era regulations.

Acting Attorney General Todd Blanche stated, “Racial discrimination is illegal and government contractors cannot circumvent the law by repackaging it as DEI.”

The settlement, announced on Friday, addresses federal allegations that IBM “knowingly maintained” discriminatory practices, which the company denies.

The government accused the tech giant, based in New York, of identifying “diverse” candidates for promotions, tying bonuses to diversity targets, and providing training opportunities exclusively to certain employees based on their race or gender.

It’s important to note that this settlement does not imply that IBM admits liability or that the government’s claims are unwarranted.

For IBM, which has a valuation exceeding $200 billion, the settlement sum is relatively minor.

A spokesperson for IBM mentioned, “We’re pleased to resolve this issue. Our workforce strategy focuses on ensuring we have the right people with the right skills that our clients need.”

The government acknowledged IBM’s cooperation during the investigation, highlighting their early disclosures and the voluntary changes made to their DEI programs.

President Trump emphasized the need to eliminate DEI practices during his second term, arguing that these programs undermined competency-based opportunities.

After returning to office, Trump swiftly signed an executive order directing all federal agencies to abolish DEI roles and duties.

He also mandated that federal contractors cease all diversity initiatives, urging private companies to follow suit.

Numerous corporations, including Target, Meta, Amazon, and Google, reduced their diversity programs around the time Trump took office and in the months following.

In May of last year, the Justice Department began using the False Claims Act to go after companies and universities allegedly violating the law with illegal DEI implementations.

The False Claims Act, established in 1863 and known as the “Lincoln Act,” was designed to combat contractor fraud during the Civil War.

This law states that anyone who knowingly submits false information to the government could face liability for triple the damages, along with additional penalties. Moreover, private citizens can file lawsuits on behalf of the government if they suspect fraud is occurring.

The Trump administration has recently targeted company-sponsored events that it claims discriminate against men and white individuals by inviting only specific racial or gender groups to participate.

For instance, in February, a Coca-Cola bottler in New Hampshire faced federal charges for holding a networking event intended solely for women.