DOJ targets employment programs

The Justice Department has opened a new front in employment enforcement, using the False Claims Act to settle discrimination allegations tied to hiring and promotion programs at International Business Machines. (justice.gov) On April 10, 2026, the department said International Business Machines agreed to pay $17,077,043 to resolve claims that it violated anti-discrimination requirements in federal contracts. The government said those contracts required the company to certify it would not discriminate based on race, color, national origin, or sex. (justice.gov) The case is the first resolution under the Civil Rights Fraud Initiative, a Justice Department program announced on May 19, 2025. That initiative said the government would use the False Claims Act against recipients of federal money that knowingly violate federal civil rights laws. (justice.gov) The False Claims Act is the government’s main civil anti-fraud law for federal payments and contracts. The department says it can impose triple damages and penalties when a company knowingly submits false claims or false certifications to the government. (justice.gov) In this case, the government’s theory was not just that a workplace policy was unlawful. It said International Business Machines billed or sought reimbursement on federal contracts while certifying compliance with anti-discrimination rules that the government says its employment practices breached. (justice.gov; govexec.com) Justice and outside lawyers say the settlement sketches the practices now under review at federal contractors. The allegations included a “diversity modifier” tied to bonus pay, interview and promotion practices that considered race or sex, demographic goals, and some programs or training offered only to certain groups. (justice.gov; akingump.com) The settlement papers say the alleged conduct stretched from January 2019 through the date of settlement. The Justice Department also said International Business Machines received credit for cooperation after making early disclosures and changing or ending some of the programs at issue. (akingump.com; justice.gov) International Business Machines did not admit liability. Reuters, citing the settlement, reported that the company denied unlawful conduct and that the agreement said it was “neither an admission of liability by IBM nor a concession by the United States that its claims are not well-founded.” (y94.com) The broader target is any company, university, hospital, or nonprofit that takes federal money and certifies compliance with civil rights rules. The Justice Department said in 2025 that it was encouraging whistleblowers and the public to report suspected discrimination by federal funding recipients. (justice.gov) For federal contractors, the message from the first case is practical and expensive: employment programs that once sat in human resources files can now show up in a fraud settlement tied to contract billing. The department has now put a price on that risk at $17,077,043. (justice.gov; natlawreview.com)