In late January, Gap Inc. tentatively agreed to a $1.8 million settlement of a class-action lawsuit brought on behalf of 55,000 current and former employees at its Gap and Banana Republic stores in California who claimed the trendy retailer’s dress-code policy violated state employment law.

The Gap suit is one of five filed in California in recent years. Similar suits against retailers Polo Ralph Lauren and Chico’s FAS Inc. have been tentatively settled, though judges still need to approve the agreements and the parties aren’t disclosing the terms, says Daniel Feder, an attorney for the plaintiffs in the Polo and Chico’s suits.

A settlement between women’s clothier J. Jill and fewer than 1,000 California employees over its dress code is imminent, according to the plaintiffs’ attorney in that case. In 2003, Abercrombie & Fitch agreed to a $2.2 million settlement over a comparable policy.

At issue is the long-standing retail practice of "wardrobing," in which companies use employees as living mannequins. Such practices run afoul of California law, which prohibits companies from requiring workers to pay for anything of value, including uniforms or apparel, as a condition of employment.

While the settlements don’t set legal precedent, they are causing retailers to rethink their practices. Soon after J. Jill employees sued in July 2003, the Quincy, Massachusetts, retailer reworded its employee handbook, according to Michael Walsh, an Irvine, California, attorney representing J. Jill employees.

Now instead of requiring female workers to buy J. Jill tops and dresses for work, the retailer’s handbook only encourages them to do so, Walsh says. Officials at the company did not return phone phone calls seeking comment.

Attorney Patrick Kitchin, who brought the suit against Gap, says, "What we’re hearing through our contacts in the industry is companies are moving away from mandatory uniform policies given these claims."

The Gap settlement covers employees who worked at Gap and Banana Republic locations in California between February 4, 1999, and December 31, 2003. When it is finalized, it will award affected current and former employees with $40 to $260 in Gap gift cards, with the exact amount determined by how long they worked at the company. The settlement also calls for $400,000 in fees to be paid to the plaintiffs’ attorneys.

Some retailers have skirted the issue by giving employees work clothes. And one of them was Gap’s Old Navy division. Previously, it gave employees "crew" T-shirts to wear, says Gap spokeswoman Tricia Link. That practice ended in 2004. Now Old Navy and Gap’s other divisions offer employees discounts on merchandise, and according to Link, "They can wear a variety of tops." They just can’t be another company’s brand.

—Michelle V. Rafter