Defense contractor Lockheed Martin has agreed to pay approximately $29.5 million to resolve federal allegations that its inclusion and diversity (I&D) practices discriminated against white employees, marking another significant development in the Trump administration’s crackdown on workplace I&D initiatives.
The settlement, announced Nov. 4 by the Equal Employment Opportunity Commission (EEOC) and Department of Justice (DOJ), includes $22 million to resolve allegations that Lockheed violated the False Claims Act by falsely certifying compliance with federal antidiscrimination requirements. An additional $7.5 million will go to more than 1,000 employees to resolve a 2025 EEOC commissioner's charge alleging violations of Title VII of the Civil Rights Act of 1964.
According to the EEOC, the agreement represents the largest publicly disclosed group of employees to receive monetary relief through an EEOC settlement involving alleged discrimination related to corporate I&D practices.
Lockheed Martin denied wrongdoing, stating that it agreed to settle to avoid the expense and distraction of prolonged litigation. The company did not admit liability.
Allegations of Race-Based Employment Decisions
The allegations centered partly on Lockheed Martin’s compensation and advancement practices, including a program introduced in 2021 that provided merit-based salary increases and promotion opportunities to top-performing employees.
According to federal officials, managers nominated employees for additional compensation, but those selections were subsequently reviewed against demographic targets. The DOJ alleged that company personnel pressured managers to remove nonminority employees from eligibility lists and replace them with minority employees to address racial disparities.
Investigators also alleged that Lockheed considered race and sex when making hiring and promotion decisions, maintained demographic workforce goals, and offered certain mentoring and leadership development opportunities based on protected characteristics.
The settlement stems in part from a whistleblower lawsuit brought by former Lockheed vice president Tim Booher, who will receive $4.4 million under the False Claims Act’s whistleblower provisions.
Beyond the financial payments, the EEOC agreement requires Lockheed to maintain employment practices that do not consider race or sex in hiring, compensation, bonuses, or promotions. The agency may monitor the company’s compliance during the agreement’s term.
EEOC Intensifies Scrutiny of I&D Programs
The settlement reflects the EEOC’s shifting enforcement priorities under Chair Andrea Lucas, who has made combating what the agency considers unlawful I&D discrimination a central focus.
In June, the EEOC adopted a new National Enforcement Plan for fiscal years 2025 - 2029, emphasizing intentional discrimination, facially discriminatory workplace policies, and consistent application of federal civil rights protections across demographic groups.
The agency has pursued several other I&D-related matters in 2026, including an investigation into Nike’s employment practices and a $500,000 settlement with Planned Parenthood of Illinois involving allegations of discrimination against white employees. It also sued The New York Times over alleged discrimination against a white male employee in promotion decisions.
The Lockheed settlement additionally highlights the administration’s use of the False Claims Act to investigate federal contractors whose employment practices allegedly conflict with their contractual antidiscrimination obligations. The DOJ has reached similar settlements with IBM, Deloitte, and Accenture.
What Employers Should Know
For employers, the settlement underscores the potential legal exposure associated with I&D initiatives that influence individual employment decisions based on race or sex.
While diversity outreach, efforts to expand applicant pools, and initiatives designed to ensure equal opportunity are not inherently unlawful, employers should carefully examine whether demographic goals influence compensation, promotions, hiring, or access to career development opportunities.
Federal contractors face additional risks if allegedly discriminatory practices conflict with certifications made to the government.
As enforcement priorities continue to evolve, employers may benefit from reviewing how I&D objectives are implemented in practice, particularly where managers’ performance evaluations or compensation decisions are tied to demographic outcomes.
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