DOJ Settles DEI Dispute With IBM For $17M

The Department of Justice (DOJ) announced the first settlement under its new False Claims Act initiative, a $17 million agreement with International Business Machines Corporation (IBM) related to the company’s diversity, equity and inclusion (DEI) program.

According to the DOJ, IBM certified compliance in its federal contracts while knowingly maintaining practices that discriminated against employees and applicants because of race, color, national origin or sex.

These practices, dating from January 1, 2019 through the date of the agreement, included modifications or adjustments to pay, bonuses or other compensation that caused employees to take protected characteristics into account when making employment decisions, including a diversity modifier that tied bonus compensation to achieving demographic targets, as well taking protected characteristics into account as part of decisions to hire, transfer or promote through the use of “diverse interview slates,” “diverse sourcing” and other similar employment practices, including by altering interview eligibility criteria based on protected characteristics.

In addition, IBM developed race and sex demographic goals for business units and took protected characteristics into account when making employment decisions to achieve progress towards those demographic goals, the DOJ said.

IBM also offered certain training, partnerships, mentoring, leadership development programs, educational opportunities or resources and similar opportunities only to certain employees, with eligibility, participation, access or admission limited on the basis of protected characteristics, the agency alleged.

“Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI,” Acting Attorney General Todd Blanche said in a statement. “The Department launched the Civil Rights Fraud Initiative to root out this misconduct, hold offenders accountable and end this practice for good.”    

IBM did not admit liability and denied it engaged in the alleged conduct, but agreed to pay $17,077,043, of which $8,204,348 is restitution.

The DOJ acknowledged that IBM took “significant steps” entitling it to credit for cooperating with the government in its investigation and undertook voluntary remedial measures, including the termination and/or modification of various programs and practices at issue.   

To read the settlement agreement, click . 

Why it matters: The highly publicized settlement provides a reminder to employers about the current administration’s focus on DEI, from , to , to