IBM agrees to pay $17 million to settle first False Claims Act suit over DEI

The Department of Justice (DOJ) announced on Apr. 10 that it had reached a first-of-its-kind settlement with IBM, whereby the company agreed to pay $17 million in damages over its DEI programming.

The government accused the company of violating the False Claims Act, saying IBM “knowingly maintained practices that the United States contends were discriminatory employment practices” by having “discriminated against employees and applicants for employment because of race, color, national origin, or sex.” The DOJ also accused IBM of using diversity as a bonus metric, and claimed that it afforded employees certain leadership and educational opportunities based on gender.

The DOJ launched a Civil Rights Fraud Initiative investigation into IBM over its DEI practices in May 2025. Around the same time, IBM appeared to reverse course on decades of DEI efforts, eliminating its DEI department and Diversity Council, HR Brew reported at the time. The company also ended allyship training and scrubbed decades of DEI information from its website.

IBM cooperated with and assisted in the investigation, and eliminated or modified programs the government alleged were discriminatory.

“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,” Stanley Woodward, associate attorney general, said in a statement.

The settlement, however, maintains that IBM did not engage in unlawful activity. “This agreement is neither an ​admission of liability ​by IBM ⁠nor a concession by the United States that its claims are not well-founded,” the settlement said.

“To me, it just goes to show how much this administration has federal contractors over a barrel,” David Glasgow, co-founder of the Meltzer Center for Diversity, Inclusion and Belonging at New York University School of Law, told HR Brew, noting that under the False Claims Act, the government would need to prove that the DEI program had a direct influence on the government’s decision to pay the contractor. “They know that this is a vindictive administration, and they just want to maintain contractor status…so most federal contractors have an incentive to just settle these claims.”

Shortly after President Trump returned to office, the DOJ announced it would investigate government contractors with DEI programming. The administration may consider this settlement a victory in its ongoing attempts to dismantle DEI across the public and private sectors.

This is the first time that the False Claims Act has been used to go after companies over their DEI programs, and the DOJ has encouraged workers to report employers that engage in what the government calls “illegal DEI.” Despite Friday’s settlement, this theory has not yet been tested in the courts.

In response to HR Brew’s request for comment, Sarah Minkel, global issues and crisis communications manager at IBM, said via email, “IBM is pleased to have resolved this matter. Our workforce strategy is driven by a single principle: having the right people with the right skills that our clients depend on.”