Justices to hear arguments on whether Abercrombie & Fitch discriminated against Muslim applicant

WASHINGTON—Seven years ago, an Abercrombie & Fitch Co. store in Tulsa, Okla., rejected a teenage job applicant who wore a head scarf. The retailer acted, it says, not out of bias against Muslims, but because a manager believed the head covering violated its “look policy.”

The Supreme Court on Wednesday will hear arguments over whether Abercrombie discriminated against the applicant. The case is being closely watched by businesses because it could determine how far employers must bend to accommodate the religious practices of workers, and potentially other protected attributes, such as disability or pregnancy.

“The employer is kind of between a rock and a hard place on this,” said Michael Delikat, who heads the New York employment-law practice at Orrick Herrington & Sutcliffe.

Federal civil-rights law requires businesses to “reasonably accommodate” religious practices, unless so doing would impose more than a minimal burden on the business. Similar rules apply to disabilities and pregnancy. Yet state laws typically prohibit employers from asking about religion or disability, said Mr. Delikat, who isn’t involved in the case.

Wednesday’s case centers on Tulsa-born Samantha Elauf. “I love the mall. It’s like my second home,” she said in testimony at a 2011 court proceeding, adding she often shopped at an Abercrombie store at Tulsa’s Woodland Hills Mall. “It was what everyone was wearing, so it was in style and cool.”

When she heard employees got a big discount, she applied for a sales position at one of the company’s stores.

Ms. Elauf wore an Abercrombie T-shirt and jeans to the 2008 interview—as well as a head scarf. She later testified that she had been a Muslim since birth and had worn the covering, known as a hijab, in public since age 13. She didn’t discuss her hijab or the company’s dress code with the assistant store manager who interviewed her—although the manager later testified she assumed Ms. Elauf, whom she had often seen at the mall, was Muslim.

That manager wanted to hire Ms. Elauf, but was overruled by a superior who determined the head scarf violated the company’s rigid dress code. The code forbids caps, in an effort to replicate “the preppy look of the Ivy League,” court papers say.

Word soon got back to Ms. Elauf that she had been rejected because of her hijab. She testified that she was devastated.

Both Abercrombie, of New Albany, Ohio, and Ms. Elauf, now 24 years old, declined to comment beyond court documents.

The Council on American-Islamic Relations, an advocacy group, filed a complaint on her behalf with the U.S. Equal Employment Opportunity Commission. After failing to resolve the issue with Abercrombie informally, the commission sued the retailer for religious discrimination.

EEOC guidelines say that generally an employee must ask for accommodation, beginning “an interactive process” with the employer to work something out. But in instances such as Ms. Elauf’s, in which “the employer correctly understands” the applicant’s religious practice—and rejects her because it conflicts with company policy—the case should be able to proceed, even though the applicant never sought an accommodation, the commission said in court papers.

A federal district judge in Tulsa sided with the EEOC, and a jury awarded Ms. Elauf $20,000. Abercrombie appealed, arguing in part it shouldn’t be held liable based on a manager’s speculation about religious observances, even if it proved accurate.

The Denver-based 10th U.S. Circuit Court of Appeals agreed, ruling in 2013 that Abercrombie couldn’t be liable for religious discrimination because Ms. Elauf hadn’t expressly asked for accommodation.

The EEOC has since updated its guidance on religious garb and grooming in the workplace. The commission now says an employee or applicant must be informed about dress codes or grooming policies before being expected to seek an accommodation.

Abercrombie, too, has shifted its policy, and has granted exceptions from its dress code for religious head scarves.

Under Chief Justice John Roberts , the Supreme Court has grown more solicitous of religious rights. Last year, it found that for-profit corporations can claim religious exceptions from Affordable Care Act regulations providing contraceptives to female employees. And, in January, the justices unanimously sided with a Muslim inmate who sought to grow a half-inch beard for religious reasons, despite prison regulations that generally forbid beards.

Lower courts have disagreed over whether an employee must directly ask for an exception before an employer can be liable for discrimination.

“Where it’s obvious on its face, you don’t have say, ‘I’m pregnant!’ to put the employer on notice,” said Joseph Seiner, a law professor at the University of South Carolina. Some courts have found the same applies when a religious practice is obvious, he said.

Ms. Elauf’s retail career, meanwhile, has blossomed. She was hired by Old Navy and Forever 21, where she rose to be a co-manager. Last week, in Tulsa’s trendy Brookside district, she helped open Oklahoma’s first Urban Outfitters location, where she is merchandising manager.