On Friday, IBM reached a $17 million settlement agreement with the United States Department of Justice (DOJ) to resolve allegations that the company engaged in unlawful diversity, equity and inclusion (DEI) employment practices. Regulators claim IBM factored race, color, national origin, and sex into its hiring and promotion decisions in violation of civil rights regulations. The DOJ also accuses IBM of diverting funds from its federal government contracts to fund internal DEI programs, then submitting requests to get reimbursed for those expenses by the government.

IBM has denied all wrongdoing connected to the claims. Per the terms of the settlement, the deal does not require IBM to admit legal liability, nor does it count as a concession that the DOJ’s allegations lack factual or legal merit. “IBM is pleased to have resolved this matter. Our workforce strategy is driven by a single principle: having the right people with the right skills that our clients depend on,” an IBM spokesperson told TechCrunch in an official statement.

The investigation traces back to actions taken earlier last year by then-Attorney General Pam Bondi, who instructed the DOJ to “investigate, eliminate, and penalize” any illegal DEI programs operated by private-sector companies that receive federal funding. As a long-standing government contractor, IBM falls directly into this regulated group. Shortly after Bondi’s directive, the DOJ launched the Civil Rights Fraud Initiative, a program focused on bringing legal claims against federal fund recipients that “knowingly violate civil rights laws.” The IBM settlement marks the first finalized resolution the federal government has secured under this new initiative.