A Blemish on the Beauty Industry

Stolen wages. Twelve-hour days, six days a week. Ethnic discrimination. Verbal abuse. Noxious fumes. Birth defects. Lax regulatory enforcement.

Who would have thought that describes a day in the life of a nail technician? In May of this year, The New York Times published two articles describing the sometimes dangerous work and cruel treatment of the people employed by discount nail salons in the New York metropolitan area.

The articles allege workers at some salons were withheld wages, paid as little as $30 per day or required to pay a fee to take the job in the first place. A follow-up piece explores the incidences of cancer, miscarriages, birth defects and other health concerns experienced by nail technicians (and their children).

These revelations are more than a concern for those who work in or patronize salons. Insurance agents and brokers have a role in this story, too. Under new regulations in New York state, salons face stiff penalties for lacking proper insurance. I believe it is only a matter of time before other states, municipalities or cities follow suit.

In New York state, the regulatory response was swift. Days after these articles were published, New York Gov. Andrew Cuomo established a task force to shut down salons with egregious violations and seek wages for unpaid workers.

On June 19, the New York Senate approved a bill that would allow the Department of State to fine or shut down salons operating without a state license, bond or liability insurance. Salons are provided a three-day notice and can appeal. The owners of unlicensed salons can be charged with misdemeanors, the penalty for which is six months in jail and a $2,500 fine. Before this law took effect, running an unlicensed salon was not a criminal offense. At the same time, the bill requires financial regulators to ensure the availability of insurance and bond to salons.

The law seeks to provide better support for workers on a number of fronts. Salons that have been found to compel prostitution or be involved in sex trafficking can be denied a state license. Unlicensed nail technicians are now allowed to register with the state as trainees so they can work while they study. It calls for better personal protective equipment to minimize exposure to fumes and dust. Furthermore, salons are now required to post a workers’ Bill of Rights, which is available in 12 languages.

Based on my professional knowledge of nail salons, I believe the NYT articles describe a small fraction of a thriving industry, one which is comprised largely of ethical salon owners and workers who are treated and paid fairly. But New York’s salon laws have implications for salons everywhere. The two stories stirred the moral sensibilities of everyone who has ever received a manicure or pedicure.

This is an opportunity for brokers to prove their value to these insureds. Brokers should remind salons of the risk management best practices for salons, including:

• Display the business license prominently.
• Require employees to wear protective equipment.
• Keep the salon clean, organized and tidy; be sure to clean up any spills to prevent slip and fall incidents.
• Ensure nail technicians work reasonable hours.
• Install and use appropriate ventilation systems.

At renewal time, brokers should take care to review salons’ risk management practices and evaluate their coverage for any gaps. With increased scrutiny on nail salons all over the country, there is no room for error.