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updated 9:34 p.m. ET May 13, 2008

NEW YORK - A New York City restaurant has settled a lawsuit brought against it by a lesbian who said she was ejected because a bouncer thought she was a man in the ladies' room.

Caliente Cab Company, while denying the allegations, agreed to pay Khadijah Farmer $35,000 and train its staff to be sensitive to gender identity issues.

Farmer said she's happy with the outcome, saying it "does send a positive message."

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She said she was humiliated last year when she and her party were thrown out of the restaurant after the annual Gay Pride parade.

Farmer, who wears her hair close-cropped and favors khakis and man-tailored shirts, said she has no intention of changing her look.