IBM reached a $17 million settlement agreement on Friday with the U.S. Department of Justice (DOJ). The DOJ had accused IBM of “illegal DEI practices,” claiming the company considered “race, color, national origin, or sex” in its hiring and promotions. The DOJ also alleged that IBM used money from its government contracts for Diversity, Equity, and Inclusion (DEI) programs and then sought reimbursement.
IBM denied any wrongdoing, and the settlement does not mean the company admits liability or agrees that the DOJ’s claims were valid. An IBM spokesperson told TechCrunch, “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.”
Earlier last year, the then-Attorney General, Pam Bondi, told the DOJ to “investigate, eliminate, and penalize” any DEI programs considered illegal in private companies, like IBM, that get federal money. IBM, as a government contractor, does receive federal funds. Soon after, the DOJ announced the Civil Rights Fraud Initiative. This initiative involves filing lawsuits against organizations that receive federal money and “knowingly violate civil rights laws.” The IBM settlement is the first time the government has reached a resolution under this new initiative.
This settlement highlights the increasing scrutiny that DEI programs face, especially within companies that have government contracts. It sends a clear message about the government’s stance on how companies can implement DEI initiatives while receiving federal funds. The outcome will likely influence how other government contractors review and adjust their own DEI strategies to ensure compliance with civil rights laws, even as the tech industry at large continues to navigate the complexities of building diverse and inclusive workplaces.
