Lockheed Martin has agreed to pay $29.5 million to settle allegations by the Trump administration that it discriminated against workers on the basis of race and sex.
The settlement is the latest from a wide-ranging Justice Department probe of diversity, equity and inclusion initiatives of major companies with federal contracts including Deloitte, Accenture and IBM.
It also resolves a 2025 charge filed by the Equal Employment Opportunity Commission and calls for Lockheed to pay $7.5 million to 1,000 employees for allegedly engaging in race discrimination against White workers.
In a statement, Lockheed Martin denied any wrongdoing and said it agreed to the settlement to avoid the "distraction and expense of prolonged litigation."
"We did not admit
liability, determining it would be best for all involved to put these matters behind us so we can remain focused on our critical national security mission," the defense contractor said.
DOJ investigated Lockheed bonus program
At issue were allegations that Lockheed failed to comply with antidiscrimination requirements in its federal contracts by improperly injecting race and sex criteria into an internal bonus initiative. The assertions center on a program introduced in 2021 to give the top 20% of employees in each business area a salary bump in addition to company-wide annual raises.
Managers submitted nominations based on merit and performance but, before finalizing choices, Lockheed ran statistical analyses on the nominee pools, the Justice Department alleged. If a business unit's selections showed demographic disparities, the system flagged the group as a statistical outlier. According to the DOJ, human resources staff pressured leaders to justify their choices.
"Federal contractors must certify that they will make employment decisions − including decisions on how to compensate their hard-working employees − without regard to race or sex and putting a thumb on the scale in hiring, promotion and compensation decisions based on race flies in the face of that requirement," Assistant Attorney General Brett Shumate of the Justice Department’s Civil Division said in a statement.
Settlement is latest from DOJ's DEI probe
The Trump administration is investigating DEI initiatives under the False Claims Act, a federal law used to take action against contractors suspected of defrauding the government. The Justice Department has embraced the theory that considering race or gender in employment practices constitutes fraud against the government.
Federal contracts require contractors to provide equal opportunity in the workplace and companies must certify they don’t discriminate on the basis of race or sex.
In May 2025, the DOJ signaled its intention to investigate federal contractors and grant recipients by creating the "Civil Rights Fraud Initiative," which threatens legal action under the False Claims Act. In April, IBM agreed to pay $17 million to resolve allegations its DEI programs violated the False Claims Act. It was the first such settlement since the Justice Department established a task force last year to crack down on DEI using anti-fraud law.
Government scrutiny has only intensified since then as the Trump administration increases pressure on employers to overhaul their staffing and promotion practices to align with the president’s political agenda.
Damages and penalties can quickly add up in False Claims Act lawsuits, lawyers previously told USA TODAY. Defendants are at risk of being held liable for three times the damages the government alleges.
DEI whistleblowers cash in on fraud cases
What’s more, the DOJ has encouraged whistleblowers to file DEI lawsuits on the government’s behalf and potentially receive a portion of the windfall. A Justice Department bounty program gives tipsters a cut of the proceeds in False Claims Act cases. Earlier this year, the DOJ said it had seen a "rapid increase" in whistleblower complaints.
Under the whistleblower provision of the False Claims Act, Tim Booher, a former vice president at Lockheed, will receive $4.4 million from the settlement.
Just the mere threat of a False Claims Act investigation is a powerful cudgel, lawyers have said. And becoming a target of the Trump administration carries significant business risks, from reputational damage to shareholder class action lawsuits.
Just hours after he took the oath of office, President Donald Trump issued executive orders to dismantle diversity programs and directed federal contractors to end "illegal DEI discrimination." Fearing lawsuits and the loss of government contracts, dozens of the nation’s largest companies, from McDonald’s to Facebook owner Meta, rolled back or eliminated DEI programs.
Though views remain deeply polarized, workers across the ideological spectrum are growing more positive about the workplace benefits of diversity programs, recent polls show. This unexpected bipartisan support for DEI emerged in the latest Bentley University-Gallup Business in Society survey provided exclusively to USA TODAY in September 2026.
This article originally appeared on USA TODAY: How Lockheed Martin’s bonus program triggered federal diversity probe
