This term to me seems so distinctly UK it is not a good choice to apply to American casual
clothing. Here's what word-detective had to say about it:
"Mufti the Bowtie Slayer.

Dear Word Detective: I would be very grateful for any explanation regarding the origin of the
word "mufti." This is an expression commonly used to describe casual business dress code in
the U.K. I suspect this word may stem from British colonial rule in India, but I am unable to
substantiate this theory. -- Matthew Martin, via the internet.

Close, as we say in the U.S., but no cigar, although it was a very good guess. This is the first
time I've heard the word "mufti" applied to "Casual Day" in offices, probably because "mufti" is
more commonly heard in the U.K. than in the U.S. Not that U.S. workers are slouches when it
comes to slouching, of course. I worked for many years in an office, and took great pride in
forging my own personal "Casual Day" all week long. I would just periodically declare, in the
most ominous tone I could muster, "I'm very sorry, but I cannot wear a necktie. Neckties cause
insanity," and my superiors would leave me alone.

Strictly speaking, "mufti" (pronounced MUFF-tee) refers to civilian clothes worn by someone,
such as a member of the military, who ordinarily wears a uniform. A soldier on leave, for
instance, might well relish the chance to lounge around "in mufti" and not worry about polishing
a lot of silly brass (either literally or metaphorically).

"Mufti" is indeed a relic of the British colonial experience, though its roots are in the Middle
East, not India. A "mufti" is a Muslim judge, from the Arabic word meaning "to give a legal
decision," the same word that gave us "fatwa" or "fetwa" (religious decree), brought to popular
attention by the Iranian death sentence proclaimed against author Salman Rushdie a few years
ago.

Just how an Arabic word for a Muslim jurist came to mean "casual dress" is a bit unclear. But
experts theorize that the first use of "mufti" in English was in reference to the costumes used to
portray Arab potentates in popular Western stage dramas in the 19th century. These getups
were highly exotic and colorful, making "mufti" a fitting metaphor for a style of dress that was
as un-military as possible. "