Hijabs, or head scarves, are now permitted as an exception to the employee dress code, According to Kim Bhasin at Huffington Post.
Current employees will also be informed that exceptions to the dress code can be made upon request. Workers who are reprimanded can also go through an appeal process.
Abercrombie & Fitch will also submit biannual reports to the U.S. Equal Employment Opportunity Commission for the next three years regarding the new policies, according to Bhasin.
The EEOC filed lawsuits on behalf of two Muslim women who accused the retailer of discriminatory practices.
The company paid a combined $71,000 to the two women, plus their attorneys' fees.
"We are happy to have settled these cases and to have put these very old matters behind us," the company said in a statement to The Huffington Post.