IBM agreed to pay $17 million to resolve allegations by the Trump administration that its diversity, equity, and inclusion policies discriminated against employees and job applicants, in the first settlement secured under the Justice Department’s new Civil Rights Fraud Initiative, Ars Technica reported.

The Justice Department said the initiative, launched in May 2025, was created to leverage the False Claims Act against government contractors accused of maintaining DEI programs that violate anti-discrimination requirements in federal contracts. The department accused IBM of falsely certifying compliance with those contract provisions while maintaining practices that took race, color, national origin, or sex into account in employment decisions. 

The department said IBM used a “diversity modifier” tied to demographic targets in bonus compensation, altered interview criteria based on race or sex, and set demographic goals for business units that allegedly influenced hiring and employment decisions, according to the report. 

The government also alleged IBM limited access to some training, mentoring, leadership development, and educational programs on the basis of race or sex and sought reimbursement for costs tied to those practices under its federal contracts, Ars Technica said. 

IBM agreed to pay $17,077,043 within 14 days of the settlement, including civil penalties and $8.2 million in restitution to the government, according to the news outlet.

“IBM is pleased to have resolved this matter,” the company said in a statement carried by Ars Technica. “Our workforce strategy is driven by a single principle: having the right people with the right skills that our clients depend on.”

The settlement reflects the Trump administration’s broader effort to pressure both public institutions and private companies to roll back diversity initiatives, including through executive orders and regulatory leverage over federal contractors, the news outlet said. 

Read more at Ars Technica