The ''Workplace Religious Freedom'' bill was initiated by civil rights group Sikh Coalition and sponsored by Queens Democrat Council member Mark Weprin.
In signing the law, Bloomberg said employers must make a "reasonable accommodation" for an employee's religious practices unless following such practises creates an "undue hardship." The undue hardship is now defined as requiring "significant expense or difficulty."
"This bill sends the message that people should not have to choose between serving our city and adhering to their religious beliefs. All Americans should receive the full embrace of our country's constitutional freedoms," Weprin said.
Sikh Coalition's programme director and co-founder Amardeep Singh said the law would ensure that religious minorities like Sikhs and Muslims in the US are not discriminated against by their employers for practising their religion.
"The law is a major step in ensuring Sikhs and other religious minorities are not unfairly excluded from jobs for which they are otherwise qualified," Singh told PTI.
He said a few Sikhs were told by the New York Police Department (NYPD) that they could not wear their turbans as traffic agents.
Similarly, Sikhs and Muslim workers at the Metropolitan Transit Authority (MTA) were forced to brand their religious headwear with an MTA logo.