Bass, Berry & Sims attorney Denise Barnes provided insight on the government’s recent settlement with IBM to settle allegations into the company’s diversity, equity and inclusion (DEI) practices. The IBM deal is the first of its kind involving a company and alleged violations of the False Claims Act related to DEI practices. The article suggests this deal may signal the Department of Justice’s (DOJ) focus on enforcement actions involving DEI and the potential fines incurred.
Denise noted that the allegedly unlawful practices outlined in the settlement point to the type of practices DOJ views as violations under the FCA. She said this conduct “closely aligns” with Executive Order 14398 directed at federal contractors and any “racially discriminatory DEI activities.” Denise added that “this settlement should cast additional light on what the government views as impermissible conduct under the anti-discrimination laws, giving rise to potential FCA liability.”
In discussing the payment amount, Denise explained the settlement “appears to reflect a cooperation credit…. This is notable because although IBM ultimately paid $17 million to resolve the investigation, the government likely viewed IBM’s single damages exposure higher than $8.5 million dollars given that IBM received the benefit of a cooperation credit here. This is the first insight that we have into how the government is quantifying these types of allegations.”
The full article, “4 Takeaways After IBM Strikes $17M DEI Deal With Feds,” was published by Law360 on April 14 and is available online (subscription required).