Ms Powell had been arrested during a traffic stop in may 2015 on charges still pending.
She gave her identification information to officers for verification but when they checked, it was discovered that the woman had already three misdemeanor warrants for minor theft, vehicle theft and resisting arrest, police had said.
LOS ANGELES | A muslim woman who had her veil forcibly removed by police officers during his time in custody, will receive $ 85,000 from the city of Long Beach, in the suburbs of Los Angeles, in the framework of an amicable agreement.
Powell was denied requests for a female officer to search her, and was denied requests to wear her hijab in custody.
The Muslim woman who wears her hijab for religious reasons was forced to stay the night in jail feeling exposed. They didn't return it until she was bailed out of jail the next day.
The department has since changed its policy on religious headwear.
"Adding", As a result of the foregoing deprivations of the free exercise of her religion, Kirsty Powell suffered severe discomfort, humiliation, and emotional distress".More news: Wall St stock rally could be derailed by US-N Korea tension
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According to the lawsuit, "She cried throughout the ordeal and experienced humiliation when both her religious beliefs and personal integrity were violated".
Powell filed the lawsuit in April 2016, alleging the police department had violated her First Amendment rights.
CNN's calls to the Long Beach City Attorney's Office were not returned.
The Council on American-Islamic Relations announced this week that a federal lawsuit filed by the group on behalf of plaintiff Kirsty Powell had been settled, after a vote on Tuesday by the Long Beach City Council.
"We commend Kirsty Powell for choosing to defend her right to religious freedom and taking action".
Powell had said at the time the suit was filed: "I would never want anyone to go through what I felt from this experience".