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IBM agreed to pay $17,077,043 to the federal government to resolve allegations of illegal diversity, equity and inclusion (DEI) practices.
The DOJ touted the settlement as the first False Claims Act resolution secured under the Civil Rights Fraud Initiative, launched in May 2025. The False Claims Act is a 1863 law that forbids companies from overcharging or defrauding the government. The DOJ argues that engaging in certain DEI practices while holding a federal contract or receiving federal funds can be construed as fraud against the government. IBM is a federal contractor.
Acting Attorney General Todd Blanche said the following in a press release: “Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI.” He added, “The Department launched the Civil Rights Fraud Initiative to root out this misconduct, hold offenders accountable, and end this practice for good.”
IBM denies all the allegations, but the misconduct that the Justice Department claims it rooted out, according to the settlement agreement, includes diversifying the pools of candidates for interviews and training and development programs.
According to the settlement, the Justice Department alleged that IBM took race and gender into account in its hiring practices by using “diverse slates” and “diverse sourcing.” They argue that IBM used these practices to select who to interview.
While the specifics of IBM’s internal practices are not public, requiring diverse candidate pools or slates is a common approach used by many organizations to broaden recruitment and reduce reliance on informal networks. A similar concept was adopted by the NFL’s 2003 “Rooney Rule,” which requires teams to interview minority candidates for head coaching and senior football operations roles. The goal is typically to expand opportunities to more candidates, not to dictate who gets hired.
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“Diverse sourcing” was also not specifically defined, but it generally refers to expanding recruiting efforts beyond traditional pipelines to reach a wider range of candidates. In practice, it typically includes outreach to different schools or communities. Again, the goal is to expand opportunity, not dictate hiring outcomes.
The settlement also alleges that IBM provided training, development, mentorship, and leadership programs that took race or sex into account. Similar allegations have surfaced at other companies. For example, the EEOC recently filed a federal lawsuit against a Coca-Cola distributor, alleging discrimination against men after the company organized a two-day networking trip for women employees.
The allegations also claim that IBM used a diversity multiplier in its bonus calculations to help meet compensation targets, though it’s unclear what those targets were or how the multiplier was applied. Tracking compensation by race and gender is widely viewed as a useful tool for identifying bias. Gender or racial disparities in pay often emerge from the accumulation of many small decisions, and without aggregate data, those patterns can go unnoticed.
When asked for a clarification about this and the other allegations, a spokesperson from IBM simply 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.”
The IBM settlement is part of a shift in how federal agencies are scrutinizing workplace diversity practices, with college and university DEI programs also facing increased attention. The EEOC has likewise stepped up its focus in this area.
In the EEOC’s 2025 performance report, the agency highlighted its efforts to address discrimination tied to DEI policies as a major achievement. Another of the commission’s major 2025 achievements was making it easier for workers to report “DEI-related race and sex discrimination.” This crackdown on DEI efforts is naturally impacting companies.
Journalist and author, Joanne Lipman, who has covered women in the workplace for more than fifteen years, wrote in the New York Times last week that her inbox used to be full of emails from companies boasting about their work championing female employees. Now, she notes, they prefer to be left out of her pieces on gender equality.
Lipman wrote, “At a recent event about working women, I asked a room of human resources executives whether their companies’ diversity efforts were continuing, and every hand shot up. When I asked who would talk about it publicly, almost every hand quickly went down. Executives say they fear not just the administration, but also right-wing activists and misogynistic trolls who might target them.”
Companies are naturally becoming more cautious in how they approach and talk about diversity efforts. How many of these efforts can continue in this environment, and what this ultimately means for the careers of women and minorities, remains to be seen.
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