Defense contractor Lockheed Martin has agreed to pay $29.5 million to settle claims by President Donald Trump’s administration that it discriminated against white workers through its efforts to promote diversity and equity in an internal bonus program.

Lockheed Martin will pay $22 million to the US government to resolve claims that it failed to comply with anti-discrimination requirements in its federal contracts, according to the settlement announced late Tuesday by the Justice Department and the Equal Employment Opportunity Commission.

In addition, Lockheed Martin will pay $7.5 million to more than 1,000 affected employees as part of a settlement with the EEOC, which had been investigating the company for violating Title VII of the 1964 Civil Rights Act, which prohibits employment discrimination based on race.

3 A sign marks Lockheed Martin in Colorado Springs, Colorado, where officials demonstrated a new battle management project. Getty Images

In a statement, Lockheed Martin denied the government’s allegations but said it “agreed to resolve this matter with the Department of Justice and the Equal Employment Opportunity Commission 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 company said.

The case is the latest example of the Trump administration’s use of the 1863 False Claims Act to pressure federal contractors into abandoning diversity, equity and inclusion practices. The law states that contractors that make false claims to the government could be liable for extensive damages. Typically used to police fraud, the Trump administration has invoked the False Claims Act against companies it maintains have pursued discriminatory practices under the guise of promoting diversity.

The Justice Department has reached similar settlements with IBM, Deloitte and Accenture.

Civil rights groups have criticized the Trump administration’s policies for taking aim at many long-established practices that are aimed at ensuring the hiring, promotion and other employment practices do not intentionally or unintentionally discriminate against traditionally marginalized groups. Several groups have filed lawsuits against the Trump administration’s anti-DEI policies.

The allegations against Lockheed Martin center around a program the company introduced in 2021 to give the top 20% of employees a merit-based salary bump and promotion opportunities, according to the settlement agreement.

3 A Lockheed Martin F-16V fighter jet lands at Taitung’s Chihhang Air Base in Taitung, Taiwan on Oct. 2, 2026. REUTERS

Managers submitted nominations for the bonuses, which the company then ran through an analysis to “flag” statistical outliers based on the race and sex composition of the list. If the nomination list raised flags, managers were asked to review their nominations and the “merit-based basis for the selections, without asking them to take any protected characteristic into account.”

But in practice, according to the Justice Department, Lockheed Martin personnel “exerted pressure on leaders in their business group to resolve race-related ‘flags’ by directing them to add or remove particular employees based on race.” The Justice Department claimed the managers were asked to remove nonminorities from the selections and add racial minorities.

The settlement with the DOJ and the EEOC stems from complaints made by Tim Booher, a former vice president at Lockheed Martin, who will be paid $4.4 million by the US government under a whistleblower provision of the False Claims Act. According to a complaint he filed in federal court in October 2025, Booher resigned from Lockheed Martin in May 2023 because he “felt that he could no longer be complicit in LMC’s illegal discrimination.”

3 The Lockheed Martin logo is displayed at the company’s booth during the International Defence Industry Exhibition in Kielce, Poland on Sept. 8, 2026. NurPhoto via Getty Images

In July 2024, Booher said he met with EEOC Commissioner Andrea Lucas to detail his allegations against the company. Lucas, who was elevated to EEOC chair after Trump took office in January 2025, filed a commissioner’s charge against Lockheed Martin, triggering the EEOC’s investigation.

Attorneys representing Booher released a statement applauding the “amicable conclusion that avoids prolonged litigation and ensures statutory compliance in federal contracting.”

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Lucas, a vehement critic of DEI practices, has publicly urged white men to come to the EEOC with discrimination complaints and has filed her own “commissioner’s charges” against the diversity practices of companies, including Nike.

“Title VII protects every worker from employment discrimination on the basis of race — and that protection does not yield when discriminatory decisions are framed as diversity initiatives,” Lucas said in a statement announcing the settlement.