Lockheed Martin will pay roughly $29.5 million to settle federal allegations that it weighed race and sex in pay, hiring and promotion decisions while certifying to the government that it did not, a resolution that sends about $7.5 million to more than 1,000 of its own employees. The Justice Department and the Equal Employment Opportunity Commission announced the two-part settlement on Nov. 3, 2026, pairing a False Claims Act agreement with a Title VII resolution.
Under the Justice Department agreement, the Bethesda, Maryland-based contractor pays $22 million to the United States to resolve allegations that it violated the False Claims Act by failing to comply with anti-discrimination requirements in its federal contracts and by discriminating against employees and applicants on the basis of race or sex. The remaining roughly $7.5 million flows to affected workers under a negotiated agreement with the EEOC. The government stated that the claims "are allegations only and there has been no determination of liability," and that Lockheed cooperated in the resolution.
How the False Certification Theory Reaches a Pay Program
The legal hook is the equal-opportunity clause that appears in most federal contracts. As a condition of contracting, a company certifies that it will not discriminate because of race or sex and that it will take steps to ensure applicants and employees are treated "without regard to" those characteristics. DOJ alleged that from 2019 to the present, Lockheed falsely certified compliance with those conditions while engaging in discriminatory race- and sex-based employment practices.
"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," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division.
What DOJ Alleged About the "Comp Adder" Flags
The centerpiece of the government's account is an incentive program Lockheed began operating in 2021, called "Compensation Adder" or "Comp Adder." It awarded the top 20% of employees within each business area an additional pay increase on top of the annual company-wide raise.
Before finalizing selections, DOJ alleged, Lockheed ran a statistical analysis to "flag" outliers based on the race and sex composition of the Comp Adder list. Human resources staff were supposed to ask business leaders to re-review flagged selections on merit alone. In practice, the government alleged, some HR personnel pressured leaders to resolve race-related flags by adding or removing particular employees based on race. According to the release, one HR employee told business group leaders that "increasing POC [People of Color] for Comp Adder will result in removing equal count of non-minority."
The EEOC's piece of the case rests on similar alleged conduct. Its Commissioner's Charge, filed in 2025 by EEOC Chair Andrea Lucas, alleged that Lockheed violated Title VII by engaging in race discrimination against white employees in performance assessments and in bonus and other compensation decisions, including through Comp Adder. The agencies described the result as the largest class of workers to publicly recover under an EEOC settlement on account of alleged Title VII violations arising from or relating to a DEI program or practices.
Workforce Goals, Bonus Metrics and Mentoring Programs
DOJ's allegations extend beyond compensation. The government alleged that Lockheed took race or sex into account in hiring and promotion to make progress toward non-public, race- and sex-based workforce composition goals for business units. It also alleged that a Management Incentive Compensation Plan included a performance metric based on achieving specified goals for "preferred demographics," with quarterly summaries color-coding units green, yellow or red.
In 2023, according to DOJ, Lockheed's Global Diversity & Inclusion and Equity & Compliance offices set additional company-wide hiring goals described as "aspirational plus" goals that "stretch[] beyond what’s potentially achievable." The government further alleged that Lockheed offered certain training, mentoring and leadership development opportunities on the basis of race or sex, citing an Executive Leadership Diversity Mentoring program as one example.
A Former Vice President's $4.4 Million Whistleblower Share
The False Claims Act portion also resolves a qui tam suit brought by Tim Booher, a former Lockheed vice president. The case is captioned United States ex rel. Tim Booher v. Lockheed Martin Corporation, No. 4:25-cv-00769-P, and was handled with the U.S. Attorney's Office for the Northern District of Texas. Under the resolution, Booher will receive $4,400,000.
"Companies that receive taxpayer money from government contracts must play by the rules," said U.S. Attorney Ryan Raybould for the Northern District of Texas. The Department of War Office of Inspector General provided investigative assistance.
The Fourth Civil Rights Fraud Settlement, and Not the Last
Lockheed's agreement follows other recent settlements under the Civil Rights Fraud Initiative, which the Justice Department launched in May 2025. "This is the Department’s fourth False Claims Act settlement resolving allegations of racial discrimination against employees," said Associate Attorney General Stanley E. Woodward Jr.
The EEOC agreement carries forward-looking obligations as well. It requires Lockheed to comply with Title VII and Executive Order 14151 and to maintain a merit-based workplace in which race and sex are not considered in hiring, compensation, bonus or promotion decisions. The EEOC may review the company's compliance over the term of the agreement.
"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," said EEOC Chair Andrea Lucas in the EEOC announcement.
What It Means for Contractors
The Lockheed resolution shows how far the government's False Claims Act theory now reaches into ordinary human resources machinery. DOJ treated the alleged use of a demographic review step in a pay program to swap employees in and out as a false certification under the contract's equal-opportunity clause, with exposure dating back to 2019.
Several practical points follow for companies holding federal contracts:
- Audit the review steps, not just the policy. DOJ's allegations center on how HR staff responded to statistical flags, rather than on the program's stated merit criteria.
- Check incentive plans and program eligibility. Bonus metrics tied to demographic goals and mentoring programs limited by race or sex both featured in the allegations.
- Expect insiders to file. A former vice president brought this qui tam action and will receive $4.4 million under the resolution.
- Plan for parallel exposure. The EEOC and DOJ announced their resolutions together, so similar alleged conduct produced both a federal recovery and worker payments.
With four such settlements now on the books and a dedicated enforcement initiative behind them, contractors should treat equal-opportunity certifications as compliance representations that DOJ is actively testing.
