By Carmine Carcieri
Governor Andrew Cuomo announced wage bond requirements for nail salon owners on Monday, giving these small businesses 60 days to acquire an insurance bond that would cover wage theft and overtime violations. All nail salon owners will be forced to secure bonds by October 6 or they could face fines and a possible closing of their business.
The legislation comes after the New York Times exposed poor conditions and rampant wage theft within New York City’s nail salon industry earlier this year.
Assemblyman Ron Kim, who is the main sponsor of the nail salon legislation and chairs the Task Force of New Americans in the New York Assembly, expressed concern over insurance requirements, as he wants these wage bonds “readily available” in the marketplace.
“I’m worried because it has to be a fairly priced insurance policy,” Assemblyman Kim told the Queens Tribune. “Based on initial interactions, these companies could end up bankrupt because they cannot afford it.”
While Kim is not opposed to wage bonds, he fears that this policy is being “rushed” and that Cuomo is not giving these “mom-and-pop” businesses enough time to get their expenses in order.
“With what is available in our current policy structure, I know this short-term solution is a step that we can take to temporarily try to provide some safety for our workers, but we obviously still need better policies that will help us find that long-term solution to protect workers that will become a model for other industries in our state and in our country,” Kim said in a statement.
The insurance carriers, nine companies in total, will need up to a year to properly create a product or bond for each nail salon. But Kim continues to fight, saying that the high prices would force these small businesses into bankruptcy.
The new wage bond requirements are based upon a law that was passed by California city Council in 2003. The Council put together a package that required car wash owners to post bonds for wage and hour claims. But Kim says that this “has never been done for small businesses in any industry.”
“The last thing we want is to setup the good operators for failure,” Kim said. Their making an effort but it has to be a fairly price insurance.”
According to Fortune.com, a state task force has been investigating salons and has implemented new rules that have forced salons to protect nail technicians from the harmful chemicals. They are now requiring workers to wear gloves and masks.
In May, Cuomo released a possible solution saying that every nail salon must secure either a bond or expanded insurance policy to cover claims for unpaid wages. These wages are put into place as a financial guarantee and give the company a level of accountability in the case of illness or injury.
“For a $100,000 bond, a company must put down 10 to 20 thousand,” Kim said. “That’s way to much for our mom-and-pop stores.”
The legislation will affect many Korean American and Hispanic business owners, who dominate the nail salon industry.
This new policy, that hasn’t had great precedent in the United States, needs to be revisited, according to Kim.
“I am continuing to work with other members in the assembly to find long-term solutions that can uplift and empower an industry that provides billions in revenue for the state and over 40,000 jobs,” he said. “I am working around the clock with my colleagues, as well as insurance carriers and underwriters.”