International Business Machines Corporation (IBM) agreed to pay $17 million to settle a U.S. government case over its diversity, equity and inclusion practices, in a deal announced on Friday by Acting Attorney General Todd Blanche.
The agreement is the first resolution under the Justice Department’s Civil Rights Fraud Initiative, which was launched in May 2025 to use the False Claims Act in cases tied to alleged discriminatory practices by federal contractors. IBM said it resolved the matter but denied unlawful conduct.
The Justice Department said IBM made false claims to the federal government about its hiring and employment practices in contracts with federal agencies. The settlement said the company used measures tied to demographic goals, including a “diversity modifier” that linked bonus compensation to progress on those targets.
Federal officials also said IBM identified “diverse” candidates for some hiring and promotion decisions while setting race and sex demographic goals. The government said those practices conflicted with federal civil rights rules that apply to contractors doing business with the United States.
The settlement amount is about $17 million. The agreement also states that IBM ended or changed various programs and policies that were part of the government’s review.
IBM said it was satisfied to put the case behind it. In a statement, a company spokesperson said, “IBM is pleased to have resolved this matter.” The spokesperson added, “Our workforce strategy is driven by a single principle: having the right people with the right skills that our clients depend on.”
At the same time, IBM did not admit liability. The settlement says the agreement is “neither an admission of liability by IBM nor a concession by the United States that its claims are not well founded.” That language leaves both sides holding their legal position while ending the case.
IBM denied engaging in unlawful conduct as part of the settlement. The company’s position remained unchanged even as it agreed to make the payment and close the probe.
The case is notable because it is the first public resolution tied to the Civil Rights Fraud Initiative. Blanche launched that effort in May 2025, and the Justice Department has used it to pursue cases under the False Claims Act. That law allows the government to recover losses tied to fraud claims involving federal funds and contracts.
In Friday’s announcement, Blanche said, “Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI.” He added that the department launched the initiative to “root out this misconduct, hold offenders accountable, and end this practice for good.”
The settlement comes during a broader push by President Donald Trump’s administration against DEI policies in both government and private institutions. Reuters said the White House has framed DEI programs as discriminatory and has ordered federal contractors and subcontractors to remove them.
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The administration’s campaign has extended across agencies, universities and contractors. Federal agencies were directed early in Trump’s second term to remove DEI offices and positions, and the Justice Department later expanded its use of anti-fraud law in this area.
For IBM, the settlement closes one of the first major contractor cases to reach a financial resolution under the new initiative. For the Justice Department, it sets an early example of how the policy will be enforced in federal contracting cases.