‘The days of using federal funds to further discrimination are over’: IBM to pay $17 million in first-of-its-kind ‘Civil Rights Fraud Initiative’ settlement – Trump administration anti-DEI push seeks to strip businesses of ‘inherently divisive policies’

• IBM will pay $17 million in a settlement with the US government
• The government alleged that IBM pursued discriminatory DEI policies
• IBM said it was taking measures to remove DEI policies while also denying it had any

IBM is set to pay over $17 million in a settlement after the Trump administration claimed the firm had discriminatory diversity, equity, and inclusion (DEI) policies.

The settlement is the first successful claim made under the ‘Civil Rights Fraud Initiative’, the US Department of Justice (DoJ) has claimed.

The total payment includes civil penalties and $8.2 million in restitution to the government.

Trump continues anti-DEI push

The Trump administration introduced the Civil Rights Fraud Initiative in May 2025. The initiative allows the government to pursue federal funding recipients for damages and civil penalties by treating DEI policies as a ‘false claim’ under the False Claims Act of 1863.

In its claim, the DoJ alleged that by failing to comply with anti-discrimination requirements in its federal contracts, IBM had therefore violated the False Claims Act. The DoJ explained that IBM had “discriminated against employees during employment and applicants for employment because of race, color, national origin, or sex, and failed to treat employees during employment without regard to race, color, national origin, or sex.”

Alongside these claims, the DoJ also alleged that IBM made employment decisions by taking into account “race, color, national origin, or sex” and used a “diversity modifier that tied bonus compensation to achieving demographic targets.”

Furthermore, the DoJ alleged that IBM “developed race and sex demographic goals for business units” and progressed these goals using DEI initiatives. The DoJ additionally claimed that IBM “sought payment and reimbursement under its federal government contracts” for the costs of the initiatives.

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

Confusingly, the settlement states that IBM has both ended the DEI initiatives it was accused of having, while also denying they ever took place. The settlement states that IBM is “taking voluntary remedial measures, including the termination and/or modification of various programs, policies, or other activities described in the Covered Conduct,” and then states, “IBM denies that it engaged in the Covered Conduct.”

The Trump administration has aggressively pursued the dismantling of DEI policies, with President Trump signing executive orders 14151 and 14173 immediately following his inauguration in January 2025 - both of which sought to end the implementation of DEI policies by federal agencies and contractors.

On the DoJ page for the Civil Rights Fraud Initiative, Deputy Attorney General Todd Blanche said, “America has watched a tidal wave of anti-Semitism sweep our universities and seen public institutions codify inherently divisive policies like DEI at an unprecedented rate,” adding that “the days of using federal funds to further discrimination are over.”

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