IBM has agreed to pay $17,077,043 to the US Department of Justice for failing to comply with President Donald Trump’s Civil Rights Fraud Initiative.
According to the settlement document, IBM engaged in “illegal DEI practices” by taking into account “race, color, national origin, or sex” in its hiring and promotions.
The tech company did so in three ways:
- By introducing a “diversity modifier” that tied bonus compensation to achieving demographic targets
- By deploying employment practices that take race, color, national origin, or sex into account as part of the hiring process
- By developing race and sex demographic goals for business units
The agreement is neither an admission of guilt by IBM nor a concession by the United States that its claims are not well-founded.
Both parties are happy with the outcome.
“The nation’s anti-discrimination laws are clear and reflect our basic commitment that opportunity, compensation, and advancement should turn on merit and performance, and not immutable characteristics,” Deputy Assistant Attorney General Brenna E. Jenny said in a statement.
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“When a company accepts federal funding while engaging in practices that sort, prefer, or disadvantage employees on the basis of race or sex, the company is stepping outside the conditions under which the government agreed to contract with them, and we will hold them accountable,” she continued.
“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,” an IBM spokesperson told TechCrunch.
IBM is the first company to settle with the Trump Administration over Executive Order 14173, which aims to end “illegal discrimination” and restore “merit-based opportunity.”
The order argues that businesses, organizations, and institutions that run Diversity, Equity, and Inclusion (DEI) programs may "actively use dangerous, demeaning, and immoral race and sex-based preferences" in violation of civil rights laws.
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