IBM to Pay $17 Million in Settlement Related to Investigation into Diversity and Inclusion Practices

IBM Agrees to Pay $17 Million to Resolve Federal Probe Over Diversity, Equity, and Inclusion Practices

The US Department of Justice announced on Friday that International Business Machines Corporation (IBM) has reached an agreement to pay $17,077,043 to resolve a federal probe over the company's diversity, equity, and inclusion (DEI) practices. This settlement marks the first resolution from the US Justice Department's unit, the Civil Rights Fraud Initiative, which was formed last year to crack down on DEI policies using a civil anti-fraud law.

According to the Department of Justice, 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. The allegations center around IBM's hiring and employment practices, which the US government contends discriminated against employees and applicants for employment because of race, color, national origin, or sex.

The settlement stems from charges that IBM knowingly made false claims regarding its hiring and employment practices in its federal contracts. US laws require companies to be fair and certify that they will not discriminate against employees or applicants for employment based on certain protected characteristics. The allegations against IBM include the use of a "diversity modifier" that tied bonus compensation to achieving demographic targets, as well as offering certain training and educational opportunities only to certain employees, with eligibility limited on the basis of race or sex.

| Charge | IBM Allegation | | --- | --- | | Knowingly making false claims regarding hiring and employment practices | Using a "diversity modifier" that tied bonus compensation to achieving demographic targets | | Failing to comply with anti-discrimination requirements | Offering certain training and educational opportunities only to certain employees, with eligibility limited on the basis of race or sex |

While IBM will pay a penalty of $17 million for allegedly violating US laws, the government 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 and undertook voluntary remedial measures, including the termination and/or modification of various programs and practices at issue. The settlement also notes that 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 matter was handled by the Justice Department's Civil Division, Commercial Litigation Branch, Fraud Section.