WASHINGTON — The International Business Machines Corporation, better known as IBM, has consented to a $17 million settlement following allegations of breaching anti-discrimination requirements tied to its federal contracts, as announced by the Justice Department. This settlement, amounting to $17,077,043, represents the inaugural case resolved under the Civil Rights Fraud Initiative. This initiative, spearheaded by Acting Attorney General Todd Blanche in May 2025, aims to curb violations of civil rights legislation by companies benefiting from federal funding.

Federal authorities asserted that IBM fell short of adhering to anti-discrimination clauses embedded in government contracts. These clauses demand that contractors must refrain from discriminating against employees or applicants based on race, color, national origin, or sex.

Acting Attorney General Blanche emphasized the gravity of the issue, stating, “Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI.” He went on to highlight the role of the Civil Rights Fraud Initiative in identifying and addressing such misconduct, holding violators accountable, and striving to eradicate these practices.

The Justice Department’s allegations point to IBM’s employment strategies, which reportedly factored in race or sex in various aspects such as hiring, promotions, and compensation decisions. These practices allegedly extended to tying bonuses to demographic objectives, implementing “diverse interview slates,” and restricting access to certain training, mentorship, and leadership programs based on race or sex.

According to the Justice Department, IBM maintained employment practices that allegedly considered race or sex in hiring, promotions and compensation decisions. That included tying bonuses to demographic targets, using “diverse interview slates,” and limiting access to certain training, mentorship and leadership programs based on race or sex. 

The government also alleged IBM set demographic goals for business units and factored those into employment decisions. 

IBM cooperated with the investigation and took steps to address the concerns, including modifying or ending some of the programs in question, officials said. 

The settlement resolves the allegations without any determination of liability.