IBM has reached an agreement with the US government to pay $17 million to resolve a federal probe over the firm’s diversity, equity and inclusion (DEI) practices, the Department of Justice said on Friday.
The settlement comes as the first resolution from the US Justice Department’s unit formed last year called “Civil Rights Fraud Initiative” to crack down on DEI policies using a civil anti-fraud law.
“International Business Machines Corporation (IBM) has agreed to pay the United States $17,077,043, inclusive of civil penalties, to resolve allegations that it violated the False Claims Act by failing to comply with anti-discrimination requirements in its federal contracts due to practices the United States contends discriminated against employees and applicants for employment because of race, color, national origin, or sex,” the DOJ said in a press release.
What were the charges against IBM?
The DOJ had alleged that IBM had “knowingly” made “false claims” regarding its its hiring and employment practices in its federal contracts, according to the settlement.
US laws require companies to be fair and certify that it will not discriminate against an employee or applicant for employment because of race, colour, national origin, or sex. They are further required to certify that will take steps to ensure that applicants are employed, and employees are treated during employment, without bias.
Trump has targeted public and private organizations – from government agencies to private universities – over DEI practices that civil rights advocates say help address historic inequities for marginalised groups like women and ethnic minorities.
“The settlement resolves allegations that IBM failed to comply with these requirements and knowingly maintained practices that the United States contends were discriminatory employment practices,” the press release stated.
In the settlement signed by the New York-based tech company and the DOJ, the US government alleged that IBM’s practices included using a “diversity modifier” that “tied bonus compensation to achieving demographic targets,” among other claims.
It also alleged that IBM offered 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.
What prompted the settlement?
While IBM will pay a penalty of $17 million for allegedly violating US laws, the government also acknowledged that the tech company took significant steps to cooperate with the investigation.
IBM made early disclosures of facts relevant to the government’s investigation. The company also undertook voluntary remedial measures, including the termination and/or modification of various programs and practices at issue.
The settlement also said IBM terminated or modified various programs and policies, but that the company denied engaging in unlawful conduct.
“This agreement is neither an admission of liability by IBM nor a concession by the United States that its claims are not well-founded,” the agreement said.
The White House casts DEI as anti-merit and discriminatory against groups like white people and men. Trump has signed executive orders asking federal contractors and subcontractors to eliminate DEI.
The matter was handled by the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section.
