On April 10, Acting Attorney General Todd Blanche announced that International Business Machines Corporation (IBM) agreed to pay the United States just over $17 million to settle claims related to alleged “illegal DEI” practices. The Department of Justice brought claims against IBM under the False Claims Act, alleging IBM failed to comply with anti-discrimination provisions in its federal contracts by discriminating against employees and applicants for employment because of race, color, national origin, or sex.
Most federal contracts require contractors to sign anti-discrimination provisions, in which companies must certify that they will not discriminate against an employee or applicant for employment because of protected characteristics. In this case, the Department of Justice alleged that IBM violated these anti-discrimination provisions through various illegal DEI practices. The alleged practices specifically included using a diversity modifier that tied bonus compensation to achieving demographic targets in hiring, altering interview criteria based on race or sex through the use of “diverse interview slates,” and offering certain training, partnerships, mentoring, leadership development programs and educational opportunities only to certain employees, with eligibility, participation, access or admission limited on the basis of race or sex. “Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI,” said Blanche in his press release.
For IBM, this settlement comes on the heels of an ongoing 2025 lawsuit from a former employee titled Washington v. International Business Machines Corp., in which Washington alleges that IBM discriminated against her because of her race to placate the Trump administration’s hostility toward DEI. Ultimately, both IBM’s efforts to institute DEI practices and subsequently remove them have placed it in the legal crosshairs.
As DEI practices continue to remain a focus area for the Trump administration, employers should carefully review their existing materials and programs, especially those that are public facing, to ensure legal compliance.
