United Parcel Service Inc. will pay $4.9 million to resolve a U.S. government lawsuit that claimed the company’s uniform and appearance guidelines are biased.

The settlement is the largest class religious discrimination settlement in the history of the Equal Employment Opportunity Commission, according to the agency’s former chief attorney.

“It’s a very important case to make sure that large employers take the steps necessary to accommodate all religious minorities,” David Lopez, the EEOC’s Obama-era general counsel, told Bloomberg Law. “It is a big case, and to the best of my recollection, that is the largest resolution.”

In its August 2015 lawsuit, the commission alleged that the package delivery giant refused to hire applicants who wore beards and long hair for religious reasons. UPS also segregated employees with religious-related beards and long hair into nonsupervisory jobs with no customer contact, denied them equal opportunities for promotion, and failed to provide them with faith-based work accommodations, the EEOC alleged.

The settlement was approved Dec. 21 by Judge Margo K. Brodie of the U.S. District Court for the Eastern District of New York. It calls for UPS to establish a $4.4 million claims fund for the workers who brought the alleged discrimination to the EEOC’s attention and a class of other eligible claimants identified by the agency. The remaining $500,000 of the overall settlement will be used to establish a reserve fund for potential claimants that haven’t yet been identified by the EEOC or UPS.

UPS also will revise its religious accommodation process for workers and the forms applicants and employees may use to request accommodations. Those documents, together with answers to frequently asked questions, will be posted on the company’s website.

Doubling of Religious Claims

Religious charges filed with the EEOC have also almost doubled since 1997, Shirley Wilcher, the executive director for the American Association for Access, Equity and Diversity, told Bloomberg Law in an email statement.

“The UPS case is noteworthy given its breadth and size of the settlement,” she said. “I do not know if this case is symptomatic of the growing racial and ethnic intolerance in the nation at large, but we will be offering more training including webinars for members to assist them in addressing this issue.”

Religious accommodations are a fundamental right, judicial analyst for religious freedom advocacy group Focus on the Family Bruce Hausknecht told Bloomberg Law.

“The real news in this case is that religious freedom has suddenly become the surprise story of the day, rather than an everyday occurrence,” he said. “Whether it involves a UPS driver, a baker, or a photographer, religious freedom should be protected as the national treasure that it is.”

The settlement further requires UPS to provide religious accommodation training and other messaging to all supervisors and human resources employees nationwide, including recruiters and interviewers, for up to five years.

UPS will meet individually with current employees identified by the EEOC as claimants under the agreement. At the meetings, the company and workers will discuss the workers’ career goals and opportunities for advancement and any ongoing concerns they may have about religious discrimination or harassment.

UPS will provide reports to the EEOC on the revised religious accommodation process and the company’s other compliance with the settlement terms periodically throughout the course of the five-year agreement.

Question of Quorum

The commission must vote on cases that fall outside of typical EEOC litigation—where systemic discrimination occurs, a case could be extremely expensive, or there is some irregularity of policy, Lopez said. The UPS case fell under that category.

Without a quorum in the future, the five-member commission won’t be able to take up cases like it, a move that is “counterproductive” to the mission of the agency, Lopez said. A recent age bias case settled with Texas Roadhouse was also approved by the commission for litigation.

Commissioner Chai Feldblum’s confirmation as one of the commission chairs has been blocked by GOP senators over her views of lesbian, gay, bisexual, and transgender workplace discrimination protections conflicting with religious defenses for employers. If a deal is not forged before Jan. 3, the commission will lose quorum and the nomination process will have to restart entirely.

“To the extent there’s any concern about Commissioner Feldblum’s commitment to protections for religious minorities, she’s always been a strong advocate,” Lopez said.

Employers, Take Note

Religious accommodations can be handled informally by an employer, but it may not be the wisest approach, Michael Eastman, the Center for Workplace Compliance’s senior vice president, told Bloomberg Law in an email statement.

“Employers are wise to consider a more structured process to ensure that religious accommodation requests are not rejected without considering whether an appropriate accommodation can be identified without imposing an undue hardship on the business,” he said.

Transferring an employee to a different job can sometimes count as an appropriate reasonable accommodation, but the employer must be sure that opportunities are not being limited, Eastman said.

“Requests to wear beards or long hair can pose an undue hardship on employers with respect to particular jobs, for example if safety is an issue,” he said. “However, employers need to know that EEOC has shown that it will closely scrutinize those decisions.”

EEOC attorneys represented the commission. Greenberg Traurig represented UPS.

The case is EEOC v. United Parcel Serv., Inc., E.D.N.Y., No. 1:15-cv-04141, consent decree approved 12/21/18.