WASHINGTON—The Supreme Court said Thursday it will consider whether retailer Abercrombie & Fitch discriminated against a Muslim woman who was denied a job because her head scarf conflicted with the company’s dress code, which the clothing chain has since changed.

The justices agreed to hear the Obama administration’s appeal of a lower court decision that ruled the New Albany, Ohio-based company did not discriminate because the job applicant did not specifically say she needed a religious accommodation.

At issue is how employers must deal with laws that require them to make allowances for a worker’s religious practices, as long as doing so does not cause the business too much hardship.

A federal judge initially sided with the Equal Employment Opportunity Commission, which sued on behalf of Samantha Elauf. The agency alleged Elauf wasn’t hired at a Tulsa, Oklahoma, store because her hijab violated Abercrombie’s “look policy,” described at the time as a “classic East Coast collegiate style.”

But the 10th U.S. Circuit Court of Appeals reversed that decision. The appeals court said Elauf never directly informed her interviewer she needed a religious accommodation, even though she was wearing the head scarf during her interview.

Abercrombie, which has faced slumping sales and could face negative publicity in the case, has pressed on with its defence, saying it was Elauf’s obligation to explain any special needs based on her religion. The company has settled two other EEOC discrimination lawsuits over the same issue and it changed its “look policy” four years ago to allow its workers to wear hijabs.

In their brief for the EEOC, government lawyers said the appeals court ruling undercuts legal protection for religious practices because it unfairly places the entire the burden on the job applicant to raise the issue. Sometimes job applicants aren’t aware of a potential conflict between a religious practice and a company policy, the government said.

In this case, the EEOC says Elauf never requested an accommodation because she didn’t know about the “look policy.” The agency also claims that Abercrombie was clearly on notice that Elauf needed to wear the head scarf for religious reasons, or else it wouldn’t have denied her a job.

Abercrombie’s lawyers say the law is clear that an employer must have actual knowledge that a religious conflict exists before any accommodation is offered. The company argues that job applicants “are not permitted to remain silent and to assume that the employer recognizes the religious motivations behind their fashion decisions.”

In 2013, the company settled two other EEOC discrimination suits filed in California. In one case, a judge determined the company fired a Muslim worker from a California store, while another judge said it refused to hire another woman in the state because of her refusal to remove the hijab during work.

The court will hear arguments next year in Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc., 14-86.