IBM has agreed to a settlement exceeding $17 million following U.S. Department of Justice allegations that its diversity, equity, and inclusion (DEI) programmes breached the False Claims Act and failed to meet antidiscrimination standards for federal contractors. The settlement, announced by the DOJ addresses claims that the technology giant knowingly violated Title VII of the 1964 Civil Rights Act.
The Justice Department alleged that IBM’s compensation and employment practices improperly accounted for protected categories such as race, colour, national origin, and sex. Specifically, the agency highlighted the use of “diverse interview slates” and “diverse sourcing” – practices the DOJ previously identified as unlawful in 2025 guidance. Additionally, the government claimed IBM set demographic goals for business units and restricted certain mentorship and leadership opportunities based on protected characteristics.
“Merit drives promotion and opportunity. Not someone’s sex or race,” stated Associate U.S. Attorney General Stanley Woodward. “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.”
The agreement does not constitute an admission of liability by IBM, and the DOJ acknowledged the company’s cooperation throughout the investigation.
“IBM is pleased to have resolved this matter,” an IBM spokesperson said. “Our workforce strategy is driven by a single principle: having the right people with the right skills that our clients depend on.”
This settlement marks a significant moment in the ongoing federal scrutiny of corporate DEI initiatives, particularly concerning the False Claims Act, which regulates how federal contract recipients certify their compliance with antidiscrimination laws.
