A recent decision from a California federal court provides a valuable lesson to employers about what to do when an employee seeks to wear a head covering that conflicts with a company dress code.

As a practicing Muslim female, Umme-Hani Khan wore a hijab in public or in the presence of men who are not immediate family members. When she was hired as a part-time employee at Abercrombie & Fitch, she agreed to abide by the company’s “Look Policy,” which prohibited employees from wearing headwear.

Khan wore her headscarf when she interviewed for the position and wore it for her first four months of work at the California store without incident. But a visiting district manager noticed that Khan was not in compliance with the Look Policy and reported her to Human Resources. When Khan refused to remove her hijab because of her religious beliefs, she was first suspended and then terminated.

She filed a complaint with the Equal Employment Opportunity Commission, which brought suit against Abercrombie on Khan’s behalf.

Abercrombie argued that because of its Look Policy, it could not reasonably accommodate Khan’s hijab without undue hardship. Compliance with the Look Policy “is key” to the company’s success, Abercrombie contended, and deviations from the policy detract from the in-store experience and have a negative impact on the brand.

But U.S. District Court Judge Yvonne Gonzalez Rogers disagreed. Noting judicial skepticism of “hypothetical hardships” where accommodations have never been put into practice, she said that “the record was devoid of any evidence that Abercrombie actually initiated good faith efforts to accommodate Khan. The only option offered to Khan was ‘to comply with The Look Policy’ or, put another way, to ‘wear the hijab on her own personal time but not in the store.’ ”

Abercrombie also failed to back up its claim of hardship, she wrote. The retailer presented unsubstantiated opinion testimony from its own employees, which was “not linked to any credible evidence,” Judge Rogers said. Khan actually wore her hijab for four months and yet “Abercrombie failed to proffer any evidence from those four months showing a decline in sales in the store; customer complaints or confusion; or brand damage linked to Khan’s wearing of a hijab.”

The company applied its Look Policy inconsistently, the judge added. Discovery revealed that Abercrombie granted almost 80 exceptions to the policy since 2005, allowing male employees to wear a yarmulke or baseball cap as well as more than 16 exceptions for headscarves.

“To the extent that Abercrombie argues more broadly that an accommodation for Khan would have threatened the core of its business model and the company’s overall success, the court is not persuaded,” Judge Rogers concluded. “Abercrombie must provide more than generalized subjective beliefs or assumptions that deviations from the Look Policy negatively affect the sales or the brand. The evidence presented does not raise a triable issue that a hardship, must less an undue hardship, would have resulted from allowing Khan to wear her hijab, particularly where she had already been wearing the hijab on the job for four months without any complaints, disruption, or a noticeable effect on sales.”

Granting summary judgment for Khan, the court said damages would be determined at a later date. But because Abercrombie offered Khan “just one option – to remove her hijab despite her religious beliefs,” punitive damages may be appropriate based on malice, reckless indifference, or in the face of a perceived risk that its actions violate federal law, Judge Rogers said.

To read the decision in EEOC v. Abercrombie & Fitch, click here.

Why it matters: Dress codes serve an important purpose for employers, particularly if the company wants to present a certain image, like Abercrombie & Fitch. When faced with an employee seeking to deviate from a dress code for religious reasons, employers first need to consider whether they can reasonably accommodate the request pursuant to Title VII. In Khan’s case, Abercrombie could have requested that her headscarf match company colors, for example. Employers do have some discretion and are not required to accommodate every request if it poses an undue hardship. Courts have interpreted the “undue hardship” requirement to require a showing of something more than a de minimis burden. Evidence of a disruption in the work environment or a decline in sales would suffice; unfortunately for Abercrombie, it was unable to provide more than generalized subjective beliefs, leaving the company on the hook for religious discrimination–and the potential for punitive damages.