* U.S. says Macy's to pay $175,000 fine, set up worker fund
* Macy's said to discriminate, use unfair document practices
By Jonathan Stempel and Phil Wahba
June 27 (Reuters) - Macy's Inc has agreed to pay a $175,000 civil fine and improve its practices to resolve a U.S. government probe that found the retailer had discriminated against immigrant employees when verifying their eligibility to continue to work.
The U.S. Department of Justice on Thursday said Macy's had engaged in "unfair documentary practices" against some immigrant employees who had previously been authorized to work.
It said this resulted in some affected workers being suspended, terminated, or losing seniority. Macy's agreed to set up a $100,000 fund to compensate these workers.
The settlement covers Macy's Retail Holdings Inc, as well as divisions that contain department store locations in western and southwestern U.S. states, Florida and Puerto Rico.
It also requires Macy's to improve training and employment reverification policies, including the use of the government's "E-Verify" platform that lets employers check workers' legal status, and subjects the retailer to two years of monitoring by the Justice Department.
"Employers must ensure that they follow correct procedures during the reverification of employment authorization of non-U.S. citizens," Gregory Friel, deputy assistant attorney general for the Justice Department's civil rights division, said in a statement.
The department said its probe began in April 2012, based on several calls to a worker hotline regarding Macy's practices. It did not immediately provide details about the specific violations.
Macy's spokesman Jim Sluzewski declined to comment.
According to the settlement agreement, Macy's denied committing immigration-related discrimination or engaging in unfair documentary practices in violation of the federal Immigration and Nationality Act.
That law bars employers from demanding more or different documents, or changing documentation rules, based on people's immigration status or national origin.
Macy's had about 175,700 full- and part-time employees as of Feb. 2, according to its annual report, and operated roughly 840 stores under the Macy's and Bloomingdale's names. The company has offices in Cincinnati and New York.
Macy's Discriminated Against Immigrant Employees, U.S. Finds