Lockheed Martin has agreed to pay nearly $30 million to settle federal allegations that it discriminated against white employees in compensation, bonuses, and performance reviews. The settlement resolves claims brought forth by the Department of Justice (DOJ), which stated the company prioritized diversity, equity, and inclusion (DEI) policies over merit.
The defense giant will pay $29.5 million, with $22 million going to the federal government and approximately $7.5 million designated for over 1,000 affected employees. The allegations first surfaced in 2021 when Lockheed Martin implemented a "compensation adder" program.
Prosecutors stated that while managers initially based raises on performance, human resources personnel allegedly pressured executives to favor minority staff members to address statistical disparities. Further allegations included hiring employees based solely on race or sex and restricting access to training and leadership programs for those who did not fit specific demographic profiles.
Associate Attorney General Stanley Woodward remarked that the penalty should serve as a warning to companies that make DEI compensation decisions prioritizing an employee's race over their work's merit. He added that this is the DOJ's fourth False Claims Act settlement resolving allegations of racial discrimination against employees and affirmed the department's commitment to eliminating "woke, unconstitutional practices" from companies receiving federal funds.
Lockheed Martin was reportedly found to be prioritizing DEI when it introduced the "compensation adder" program in 2021, which provided salary increases to the top 20 percent of employees. According to the DOJ, a system was then implemented to flag statistical outliers based on race and sex, prompting managers to review their nominations without considering protected characteristics.
This issue led to the resignation of Lockheed Martin vice president Tim Booher in May 2023. Booher filed a complaint with authorities, stating he could no longer be complicit in what he called the company's "illegal discrimination." Under whistleblower provisions of the False Claims Act, Booher will receive $4.4 million from the settlement.
Lockheed Martin has previously denied the federal allegations but stated it agreed to the settlement to avoid the "distraction and expense of prolonged litigation." The company emphasized that it did not admit liability and that settling the matter allows it to remain focused on its national security mission.