International Business Machines Corporation (IBM) has agreed to pay $17 million to resolve a probe alleging that the company violated diversity, equity and inclusion (DEI) practices banned by the Donald Trump administration last year, Associate Attorney General Todd Blanche announced on Friday.

The settlement is the first resolution under the Civil Rights Fraud Initiative, which Mr Blanche launched in May 2025 to pursue federal contractors the Trump administration accuses of factoring race, sex, colour or national origin into employment decisions.

The Trump administration terminated DEI practices that it said helped close gaps that marginalised Blacks, women and other minority groups, opining that such practices were not based on merit or performance.

“Racial discrimination is illegal, and government contractors cannot evade the law by repackaging it as DEI,” Mr Blanche said. “The Department launched the Civil Rights Fraud Initiative to root out this misconduct, hold offenders accountable, and end this practice for good.”

The U.S. government accused IBM of non-compliance, asserting that the technology company continued to consider race and gender in hiring and promotion decisions.

“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,” said Deputy Assistant Attorney General Brenna E. Jenny.

The Trump administration further alleged that IBM used “diverse interview slates” to alter its recruitment criteria to consider race, national origin, colour and sex before employing new staff.

The government also alleged that IBM adjusted interview criteria based on race or sex through the use of “diverse interview slates.”

The company agreed to pay $17 million to settle the allegations, while noting that the payment was “neither an admission of liability by IBM nor a concession by the United States that its claims are not well founded.”