IBM folds to Trump anti-DEI push, admits no misconduct but pays $17M penalty

IBM agreed to pay $17 million to the US government to resolve the Trump administration’s claim that the firm’s diversity, equity, and inclusion (DEI) policies discriminated against employees and job-seekers. The Department of Justice (DOJ) touted the settlement on Friday, saying it’s the first one secured under the Civil Rights Fraud Initiative launched in May 2025. The Trump administration created the program to make DEI-related complaints against government contractors fall under the False Claims Act of 1863, which imposes triple damages and a civil penalty on contractors that defraud the government. The Justice Department alleged that IBM violated the False Claims Act by failing to comply with anti-discrimination requirements in its federal contracts, which required IBM to certify that it would not discriminate against employees or applicants. The US claims that IBM certified compliance despite maintaining practices that “discriminated against employees during employment and applicants for employment because of race, color, national origin, or sex, and failed to treat employees during employment without regard to race, color, national origin, or sex.” The US complained that “IBM took race, color, national origin, or sex into account when making employment decisions, including by using a diversity modifier that tied bonus compensation to achieving demographic targets.” It also said that “IBM altered interview criteria based on race or sex,” and “developed race and sex demographic goals for business units and took race and sex into account when making employment decisions to achieve progress towards those demographic goals.” The US objected to IBM offering “training, partnerships, mentoring, leadership development programs and educational opportunities only to certain employees, with eligibility, participation, access or admission limited on the basis of race or sex.” It further claimed that “IBM allocated costs to its federal government contracts relating to these practices and sought payment and reimbursement under its federal government contracts for such costs.”