In 2025—not long after Trump fired off executive orders that targeted diversity, equity, and inclusion (DEI) programs in the workplace—the Justice Department announced the Civil Rights Fraud Initiative. Its purpose was to investigate companies and academic institutions that accepted money from the government, by invoking a federal law called the False Claims Act. This past week, IBM agreed to pay $17 million over claims that its DEI programs allegedly violated the law—the first instance of an employer settling a case that the government brought under this initiative.
In the settlement agreement, the federal government argued that as a federal contractor, IBM was required to comply with anti-discrimination protections under civil rights law. The government identified DEI programs that allegedly took demographic background into consideration when making employment decisions, including a “diversity modifier that tied bonus compensation to achieving diversity targets” and the use of “diverse interview slates” as part of the hiring and promotion process. The agreement also noted that it was “neither an admission of liability by IBM nor a concession by the United States that its claims are not well founded”—despite the fact that IBM had altered or ended some of the programs that were under fire.
“Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI,” acting U.S. Attorney General Todd Blanche said in a statement. “The Department launched the Civil Rights Fraud Initiative to root out this misconduct, hold offenders accountable, and end this practice for good.”
When reached for comment, an IBM spokesperson told Fast Company, “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.”
For decades, IBM had been a leader on these issues, investing in diversity programs in the ’90s, promoting gender equity, and showing clear support for LGBTQ+ workers. But in recent years, the company has made a number of changes to its DEI efforts, much like some of its peers in the corporate world.
According to a Bloomberg report last year, IBM stopped tying executive compensation to diversity goals and revised its supplier diversity program to no longer focus on race and gender. The company eliminated its diversity council as well, which had given employee resource groups a voice. IBM also came under pressure from conservative activist Robby Starbuck, who has earned a reputation for mounting social media campaigns and publicly targeting companies over their DEI practices; several major employers, from Walmart to Ford, have seemingly caved to Starbucks’s demands and made changes to their DEI programs.
The Trump administration has taken a multipronged approach to rooting out DEI programs in the workplace, taking aim at both private employers and government agencies.
Immediately after taking office, Trump issued executive orders for federal agencies to entirely eliminate their DEI teams and initiatives. The president also sought to exert control over private sector employers by revoking a 1965-era executive action that had sought to promote racial equity across federal contractors, along with explicitly directing federal agencies to investigate corporate DEI programs. Over the last year, the administration has targeted higher education institutions over claims of antisemitism and frozen federal funding—leading to sizable settlements with universities like Columbia and Northwestern that also involved altering DEI policies.
The settlement with IBM comes as private employers face increased scrutiny over corporate DEI programs. The Equal Employment Opportunity Commission has made alleged discrimination against white workers a major priority, investigating companies like Nike over their DEI efforts and putting out calls to white men who have faced discrimination in the workplace. The Justice Department had already started issuing demand letters to federal contractors last fall to gather information on their DEI practices—and with the IBM settlement under its belt, the department will likely ramp up pressure on other companies that do business with the government.
