DOJ settlement highlights False Claims Act exposure for certain DEI practices

On April 10, 2026, the U.S. Department of Justice (DOJ) announced that IBM agreed to pay approximately $17 million to resolve allegations that certain employment practices related to diversity, equity, and inclusion (DEI) violated federal antidiscrimination requirements applicable to federal contractors. This represents the first settlement under the DOJ’s Civil Rights Fraud Initiative, which was launched in May 2025 as an enforcement tool for Executive Order 14173’s directive that federal agencies and contractors eliminate what it called “illegal” DEI policies and “all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.”

Civil rights fraud

The Civil Rights Fraud Initiative is highly relevant for employers because it expands the risk landscape for companies that receive federal funds, hold government contracts, or certify compliance with federal civil rights laws. The initiative signals that the government intends to use the False Claims Act (FCA)—traditionally associated with financial fraud—as a tool to police allegedly discriminatory employment and DEI-related practices.