According to the lawsuit filed on July 26, 2010, owners and operators of Summerhill Place Apartments, in Renton near Seattle, "steered Indian tenants away from the Summerhill buildings and treated tenants from India less favourably than other tenants."
They also discouraged African-Americans, Hispanics and families with children from living at Summerhill.
Under the terms of the settlement, apartment owners Summerhill Place LLC, as well as a management company called Gran Inc and the apartment manager, Rita Lovejoy, will pay USD 85,000 to tenants and prospective tenants who were harmed by the discrimination.
The group will also pay USD 25,000 to the government as a civil penalty and enact a number of changes to the apartments.
The settlement must still be approved by the US District Court for the Western District of Washington.
"Working families already face enough challenges finding affordable housing," Thomas E Perez, Assistant Attorney General for the Civil Rights Division, said.
"Unlawful discrimination because of their race, their national origin, or because they have children, should not be one of them."
The lawsuit was filed after the Fair Housing Council of Washington conducted investigations at Summerhill, and the results were reported to the Department of Housing and Urban Development (HUD).
After an investigation, the secretary of HUD determined that there was reasonable cause to believe that discriminatory housing practices had occurred, issued a charge of discrimination, and referred the matter to the Department of Justice.
Under the terms of the settlement, the defendants also have to provide fair housing training to their employees, and develop and maintain non-discrimination policies at Summerhill.