WASHINGTON—Department store chain Dillard's Inc. is paying $2 million to settle charges that it illegally required workers who took sick leave to reveal confidential medical information.

The settlement, announced Tuesday by the Equal Employment Opportunity Commission, resolves a 4-year-old class-action lawsuit that charged Dillard's with violating the Americans with Disabilities Act.

The EEOC said thousands of current and former Dillard's employees who sought sick leave were forced to submit a doctor's note explaining not just that they were being treated, but the exact nature of their medical condition. The commission says workers who didn't feel comfortable disclosing details of their treatment were fired, even when doctors advised them not to reveal private medical information.

Dillard's, which has about 300 stores across 29 states, had argued that the policy was needed to confirm medical absences were legitimate. But the EEOC says employers are not allowed to ask for particulars of treatment unless they are job-related and necessary for the conduct of business.

In a statement, Dillard's denied that its policies violated the ADA.

"In order to avoid further protracted litigation with the EEOC over policies that are no longer in effect, Dillard's determined that the most efficient resolution was to settle with the EEOC," the company said.

Anna Park, an EEOC attorney, said some employees were forced to reveal conditions like cancer, mental illness or gynecological information just to get an excused absence.

"We found that managers weren't trained and they were really harassing people," Park said.

The settlement also resolves allegations that Dillard's fired some workers for taking more sick leave than the company allowed. The company did not confer with employees to see whether more leave was allowed under federal law to accommodate a worker's disability, the EEOC said.

Under a three-year consent decree, Dillard's will pay $2 million to identified victims and establish a class fund for victims who are not yet identified.

Park said at least 75 employees who were victims of the policies have been identified at a Dillard's store in El Centro, Calif., which was the subject of the EEOC's initial lawsuit. She expects thousands more to come forward.

Employees who worked at Dillard's between Aug. 16, 2005, and Aug. 15, 2009, can qualify to receive a monetary settlement award. In addition, anyone who worked at Dillard's and believes they were terminated after May 28, 2008, for taking too much sick leave can make a claim.

The consent decree requires Dillard's to hire a consultant to review and revise company policies and train supervisors and staff on federal disability law. The company will submit annual reports verifying compliance.

Employees who believe they are eligible for the settlement can go to www.dillardeeocsettlement.com or call 213-894-1032 for information on how to complete a claim form.

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