IBM pays $17M to settle DOJ's first False Claims Act case alleging DEI practices violated civil rights on federal contracts

IBM Certified It Wasn't Discriminating While Running the Programs DOJ Says Were Discrimination

Every federal contractor signs a compliance certification. The certification says the company does not discriminate on the basis of race or sex in employment. IBM signed those certifications on contracts covering billions of dollars of government work between 2019 and 2026.

The Civil Rights Fraud Initiative

In early 2026, the DOJ launched what it called the Civil Rights Fraud Initiative — a program targeting companies that allegedly ran race- or sex-conscious employment programs while certifying non-discrimination compliance on federal contracts. The theory: signing a false certification while collecting federal dollars triggers the False Claims Act, a statute that carries treble damages and is typically associated with defense contractor fraud.

The IBM Settlement

IBM agreed to pay $17 million to resolve allegations that its DEI programs — specifically, programs that the DOJ alleged used race and sex as factors in hiring and promotion decisions — constituted discrimination against non-preferred groups, making the company's compliance certifications false. The settlement is the first under the new initiative.

First But Not Last

Foley Hoag, which published an alert analyzing the settlement, noted that the DOJ had explicitly described IBM as the first case, not the last. The Civil Rights Fraud Initiative creates a new enforcement mechanism: any federal contractor with race- or sex-conscious employment programs now faces potential False Claims Act exposure on every certified contract.