The “American” society in the United States is becoming more diverse every single year; and consequently religious diversity is one very important dimension of a people’s belief system as well as their identity. Therefore, managers must be sensitive to their employees’ faiths, beliefs, observations, and practices; and thus they must also be cognizant of discriminatory practices and stereotyping in the workplace and strive to eliminate them. The challenge of extirpating religious discrimination and stereotyping is particularly acute regarding employees of the Islamic religious faith. American Muslims live and work in every part of the United States ‘society and economy. Yet, some people in the Muslim Diaspora regularly face discriminatory practices in the modern workplace. The widespread negative publicity related to militant groups across the world is often wrongly linked to the religion of Islam; and this perceived connection has further increased fear of, and consequently stereotyping of, and discrimination toward Muslims. Naturally, such stereotypes and biases and disparate treatment will have a negative impact on the Muslim worker’s motivation, engagement, and productivity levels. Such conduct can also lead to legal liability on the part of the employer pursuant to civil rights laws. This article supplies a practical review of recent challenges, applicable laws, and illustrative legal cases. The article discusses some of the “trials and tribulations” facing American society, particularly the biased perception of Muslims among some sectors of the general population. The article then discusses the laws regulations that provide every one with equal opportunities and freedom from discrimination as citizens, residents, and employees in the U.S. workplace. An examination of religious discrimination and harassment against Muslim employees is provided along with current case law examples. Moreover, the article provides an auditing tool for managers and human resource professionals so they can keep their firms free from litigation and potentially huge legal costs as well as adverse publicity. The article also provides suggestions for education and training to thereby increase the awareness of employers, managers, human resource professionals, and employees too on how to avoid illegal discrimination and unethical stereotyping as well as to how legally accommodate the religious needs, observances, and practices of Muslim employees in the modern workplace. The authors wish to inculcate to managers and human resource professionals as well as all people that Muslim employees are human beings, and, like other people of all religious faiths as well as non-believers, must be treated with dignity and respect and thus in a legal and ethical manner.