Nail Salon Workers Allege Wage Theft, Indicate Larger Exploitation

Many nail salons in California may be systematically cheating their employees, according to a lawsuit filed in Orange County Superior Court by the civil rights organization Asian Americans Advancing Justice.

Four Vietnamese women have filed a lawsuit against their former employers, the owners of Tustin Nail Spa in the city of Orange. The women say salon owners violated California labor laws in a number of ways, including breaking minimum wage law. It’s not the first time the salon has been accused of labor law transgressions — three years ago state officials fined Tustin Nail Spa $28,000 for violation of labor law.

According to Laboni Hoq, litigation director for Asian Americans Advancing Justice and attorney for the four women filing the lawsuit, nail salons are one of the hidden labor segments in California where exploitation of workers is rampant.

"The practices that they were subject to at this nail salon," Hoq says, "is really indicative of practices we've seen and heard about throughout the nail salon industry in Southern California and likely throughout the state."

There are an estimated 8,000 to 10,000 licensed nail salons in California -- roughly 70 percent of them are owned or staffed by Asian-Americans, predominantly Vietnamese-Americans. That's especially true in the Little Saigon area of Orange County, which boasts the largest Vietnamese population outside of Vietnam. Nail salons are in almost every small strip mall throughout Little Saigon. Within a few blocks of the Tustin Nail Spa there are a dozen other salons, including two right across the street.

According to Fred Jones, executive director of the trade association Professional Beauty Federation of California, nail salons offer a good entry opportunity -- both for unskilled workers to get a job and for entrepreneurs who want to start a business with limited capital. But as salons have proliferated, he says, competition has gotten cutthroat.

"With nail salons in particular, it’s really been a race to the bottom,” Jones says, “based solely on how cheap we can give a mani-pedi."

That pressure on owners to cut corners and cost is what's pushing the wage fight with employees, Jones says.

Thu Hang Pham is one of the former workers filing the lawsuit. She says workers were required to clock in and out as employees, but in actuality worked many more hours, with few or no breaks.

"They would have paychecks, but those would not be true to what the hours were," Pham says.

The lawsuit says the system of paying workers strictly on commission resulted in manicurists often working long hours for little pay, with the potential for salary to even fall below minimum wage. The tipping point for Pham came when salon owners wanted to change employees’ work designation to "independent contractor" — but without any of the benefits of being a contractor.

"They wanted us to rent the work stations, get an independent license, but all of those other things wouldn’t change, we still would have to give up 40 percent of our money to the owner," Pham says.

California labor law says if business owners set the rates and hours of employment, they need to pay workers as employees, not contractors.

Helen Chen is coordinator of public programs at the UC Berkeley Labor Occupational Health Program. She says it’s extremely common in the nail salon industry for owners to avoid paying overtime, vacations or holidays, or even provide work breaks. But to do all of that to employees, and then make them pay for the privilege of working there, that seems to have hit a nerve with salon employees.

“This question of whether workers are independent contractors or employees is a gateway question for the nail salon community,” Chen says. “It can be very difficult to penetrate those employment practices and change them.”

The state is trying. A new law goes into effect in July in California -- as part of all license renewals, salon owners and workers will need to sign off on a basic understanding of California labor law.

Jones of the Beauty Federation says the end result of changes in salary structure within the nail salon industry will be felt by consumers. The days of the impossibly cheap $16 mani-pedi could come to an end. He thinks that may not be a bad thing.

"If you see a nail salon that’s offering a mani-pedi for under $20, the first reaction of course, it’s human nature, is, 'Yippee! Let’s go!'" Jones says. “But hopefully with some time and reflection, you need to start asking as a consumer, 'What goes into a manicure and a pedicure?'"

There’s a common saying in the Vietnamese community: Don’t kick your bowl.

In this case, lawsuit proponents say, that means: don’t raise a fuss, even when you think employment practices might violate state law.

Vietnamese nail salons are a closed and insular community, advocates say. Airing this case in court might do more than help four former nail salon workers -- it could help change employment practices that are both accepted and illegal.

A preliminary hearing is set for Jan. 27 in Orange County Superior Court.