IBM Settles DOJ Lawsuit Over DEI Practices for $17 Million

International Business Machines Corporation (IBM) has agreed to pay the United States $17,077,043 to resolve allegations that the company engaged in illegal diversity, equity, and inclusion (DEI) practices. The settlement, announced on April 10, 2026, follows a U.S. Department of Justice (DOJ) probe into whether the technology firm violated civil rights laws and federal contracting requirements.

The DOJ alleged that IBM violated the False Claims Act by failing to comply with anti-discrimination requirements mandatory for federal contractors. As a condition of its government contracts, IBM was required to certify that it would not discriminate against employees or applicants based on race, color, national origin, or sex, and that it would take active steps to ensure equitable treatment during employment.

According to the settlement, the United States contends that IBM knowingly maintained discriminatory employment practices while claiming compliance in its federal contracts. The DOJ specifically alleged that the New York-based company made false claims regarding its hiring and employment processes.

Details of the Alleged Discriminatory Practices

The government’s allegations detailed several specific mechanisms IBM allegedly used to implement its DEI goals, which the DOJ characterized as discriminatory. These practices included altering interview criteria based on the race or sex of the candidate and establishing specific race and sex demographic goals for various business units.

the DOJ alleged that IBM utilized a diversity modifier that tied bonus compensation for employees to the achievement of these demographic targets. The company also allegedly identified diverse candidates specifically for the purposes of hiring or promotion to meet these internal goals.

Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI.

Acting Attorney General Todd Blanche

The settlement represents the first resolution secured under the Civil Rights Fraud Initiative, a program launched by Acting Attorney General Todd Blanche in May 2025 to hold government contractors accountable for misconduct involving discrimination.

Broader Regulatory Context in the Tech Industry

This legal action is part of a wider crackdown on DEI programs across both the public and private sectors initiated by the administration of President Donald Trump. Four days into the president’s second term in early 2025, federal agencies were directed to terminate all DEI-related positions and offices.

The DOJ began utilizing the False Claims Act in May 2025 to target diversity initiatives at colleges and within federal contracting. IBM is not the only major technology firm to shift its approach to these programs; both Meta and T-Mobile agreed to end their DEI initiatives in 2025.

IBM has denied that its practices were discriminatory or illegal. An IBM spokesperson stated via email that the company is pleased to have resolved this matter, adding that their workforce strategy is driven by a single principle: having the right people with the right skills that our clients depend on.

The settlement agreement specifies that the payment is not an admission of liability by IBM, nor is it a concession by the United States that the government’s claims were not well founded.