On April 10, the U.S. Department of Justice (DOJ) announced the first settlement to resolve False Claims Act (FCA) allegations regarding a private employer’s failure to comply with anti-discrimination requirements in contracts with the federal government.

The settlement with IBM comes just two weeks after the March 26 signing of a new executive order called “Addressing DEI Discrimination by Federal Contractors” (EO 14398), curbing diversity, equity, and inclusion (DEI) programming (read more here).

Following an investigation, DOJ alleged that, from January 2019 to the present, IBM falsely certified compliance with the anti-discrimination provisions of Title VII of the Civil Rights Act of 1964 and with the Federal Acquisition Regulation (including FAR clause 52.222-26 on Equal Opportunity). IBM agreed to pay $17,077,043, inclusive of civil penalties, to resolve the matter.

The allegedly illegal practices included:

• Modifications/adjustments to pay, bonuses, or other compensation that caused employees to consider race, color, national origin, and sex when making employment decisions, including the use of a diversity modifier that tied bonus compensation to achieving demographic targets;
• Consideration of race, color, national origin, or sex in decisions to hire, transfer, or promote through use of “diverse interview slates,” “diverse sourcing,” and other employment practices including altering interview eligibility criteria based on race, color, national origin, or sex;
• ...

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