A New Jersey car dealership has settled a suit over a no-beards policy that denied a job to a Sikh applicant, agreeing to enforce policies and procedures to prevent religious discrimination.

U.S. District Judge Esther Salas approved the consent decree in Equal Employment Opportunity Commission v. United Galaxy Inc., which included $50,000 in damages, on Nov. 18.

The suit accused Tri-County Lexus of Little Falls of refusing to hire Gurpreet Kherha, whose Sikh religion requires him to keep a beard, and failing to allow him a religious accommodation to its grooming policy.

In February 2008, Kherha was interviewed by a recruiter, Domenick Pupo, who asked him why he had a beard and if it was a religious requirement. Kherha said it was. A short time later, he learned that he was turned down for the job.

Pupo later told Kherha that he had performed well in his interview and was “exactly what they were looking for” in a salesman but that the dealership’s corporate owner, United Galaxy Inc., had turned down its request for permission to make an exception to the beard bar.

The EEOC alleged violations of Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, and the N.J. Law Against Discrimination.

Kherha filed suit for state claims in Passaic County but intervened in the EEOC suit filed in September 2010.

U.S. District Judge Dickinson Debevoise denied a defense motion for summary judgment on June 25. Settlement negotiations began after that.

Under the consent decree, the company agrees to revise its dress code to allow religious accommodation and to state a method for requesting it. Reasonable accommodations are to be granted unless they present an undue hardship to the company.

The company is to provide a mechanism for reporting discrimination based on religion or other protected categories.

Copies of the revised policies must be given to all employees and new hires.

The company must give its employees no fewer than two hours of training­—to be provided by Westfield attorney Resa Drasin—in federal employment discrimination laws, with emphasis on religious discrimination and the requirement of reasonable accommodation, and to give managers and supervisors an additional hour of training.

The company must maintain records of all requests for employees or job applicants for accommodation of religious practices, except for temporary requests for changes to work schedules.

Records must also be kept of all oral and written complaints about religious discrimination or failure to accommodate religious beliefs, and every three months, the company must submit reports to the EEOC on those subjects.

The company must designate an equal employment opportunity coordinator to monitor compliance with the decree, which remains in effect for two years. The court retains jurisdiction.

The nonmonetary reforms were very important to Kherha, says Kherha’s lawyer, Ravinder Bhalla of Florio, Perrucci, Steinhardt & Fader in Rochelle Park, who was assisted by Gurjot Kaur of the Sikh Coalition in New York.

Richard Yaskin, a plaintiff-side employment lawyer in Cherry Hill who was not involved in the case, said the terms of the deal were “pretty extensive.” He said the measures the employer agreed to put in place would help to “bring awareness to the issue where the supervisor might not have been discriminatory but may have been totally unaware that the applicant is entitled to an accommodation.”

Stacy Hawkins, an assistant professor who teaches employment law at Rutgers Law School-Camden, and a former management-side employment lawyer, says programmatic settlements like the one in this case became common after they were adopted in large-scale racial discrimination suits against Texaco and Coca-Cola. The Texaco case was settled in 1996 for $176 million, and the Coca-Cola case settled for $192.5 million in 2000.

Hawkins said the terms of the Tri-County Lexus consent decree were “significant obligations” and that the reporting process mandated was “fairly rigorous.” She says the terms were “highly likely to materially affect the culture at this workplace,” and added that “these kinds of programmatic decrees are very effective, especially where the court retains jurisdiction and where there’s some independent oversight.”

Jadhira Rivera, trial attorney for the EEOC, says she is pleased with the outcome. The dealership’s lawyer, Dena Epstein of Jackson Lewis in Morristown, did not have an immediate comment.