Sealy of Minnesota, which has a mattress and box spring factory in St. Paul, will pay $175,000 to settle a charge of “severe racial harassment,” according to the U.S. Equal Employment Opportunity Commission.

The federal agency said in a news release Thursday that the company subjected black and Hispanic employees to harassment that involved a noose, Ku Klux Klan hood, and racist epithets and jokes.

The agency also found that the company discriminated against black and Hispanic employees in the selection of lead positions at the St. Paul facility and violated the Civil Rights Act of 1964.

Employees complained to senior management about the conduct, but it did not stop, the agency said.

The company issued a statement Friday, saying it is “committed to a culture of diversity and respect for all people.”

“When we learned of the alleged violations of our policies by employees at our St. Paul facility which took place three years ago, we took swift action,” the statement reads. “The company terminated several employees who were in supervisory and management roles during the time of the alleged unacceptable behavior, replaced the management team at the facility, and retrained our workforce at the facility.”

As part of the agreement with the EEOC, Sealy of Minnesota will also provide employees with anti-discrimination training, revise and disseminate an anti-harassment policy, implement a more objective application process for lead jobs, and require compliance with Equal Employment Opportunity laws as part performance evaluations of supervisors, the EEOC said.

“We are pleased that Sealy worked cooperatively with us to fashion an anti-harassment policy that will better address employee complaints,” Julianne Bowman, EEOC Chicago district director, said in a statement.