IBM reached a settlement with the federal government Friday, agreeing to pay about $17 million to resolve allegations tied to diversity, equity, and inclusion practices.
The Justice Department alleged that the New York-based technology company “knowingly” made “false claims” about its hiring and employment practices in federal contracts, according to the settlement. IBM allegedly identified “diverse” candidates for hiring or promotion while developing race- and sex-based demographic goals.
IBM denied it had discriminatory or illegal diversity, equity, and inclusion practices. The settlement said the agreement was “neither an admission of liability by IBM nor a concession by the United States that its claims are not well founded.”
“IBM is pleased to have resolved this matter,” an IBM spokesperson told CNN in an email. “Our workforce strategy is driven by a single principle: having the right people with the right skills that our clients depend on.”
The Justice Department said in May 2025 that it began using the False Claims Act to challenge diversity initiatives at colleges and alleged that IBM, as a contractor, violated the law by maintaining “practices that the United States contends were discriminatory employment practices,” according to Friday’s announcement.
“Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI,” Blanche said in Friday’s press release. “The Department launched the Civil Rights Fraud Initiative to root out this misconduct, hold offenders accountable, and end this practice for good.”
The False Claims Act dates to the Civil War era and allows the government to recover up to three times its damages, plus penalties, according to the Justice Department. The law also allows private citizens to sue on the government’s behalf and keep a share of any recovery.