IBM agrees to $17M settlement to resolve DOJ lawsuit over DEI initiatives

IBM has agreed to a $17 million settlement with the U.S. Department of Justice to resolve allegations that the company engaged in "illegal DEI practices." The agreement was finalised on Friday.

According to the DOJ, IBM allegedly considered factors such as race, colour, national origin, and sex in its hiring and promotion decisions. The department also claimed that IBM used funds from government contracts to support diversity, equity, and inclusion (DEI) initiatives and later sought reimbursement for those expenses.

IBM has denied the allegations, and the settlement does not represent an admission of wrongdoing or liability. It also does not indicate that the company agrees with the DOJ's claims. In a statement, an IBM spokesperson said the company was satisfied with having resolved the matter and emphasised that its workforce strategy focuses on ensuring it has the right talent and skills to meet client needs.

The case follows broader actions taken by the DOJ regarding DEI-related practices among private companies that receive federal funding. Earlier last year, former attorney general Pam Bondi directed the department to investigate and take action against DEI programs that could be considered unlawful within organisations benefiting from government contracts, including companies like IBM.

Following that directive, the DOJ launched the Civil Rights Fraud Initiative, which aims to pursue claims against entities that knowingly violate civil rights laws and receive federal funds. The settlement involving IBM represents the first resolution secured by the government under this initiative, marking a notable development in how federal authorities are approaching DEI-related compliance in the private sector.