UPDATE: NY Nail Salon Owners Must Post Wage Bond by October 6, 2015

nail salon

N.Y. Gov. Andrew Cuomo announced earlier this week Monday that all nail salon owners must obtain a wage payment bond by October 6, 2015.

This requirement has been in the works for months following the publicized investigation of nail salons statewide by the New York Times. The investigation unveiled controversial widespread mistreatment and employee abuse in the industry, prompting a public outcry and media frenzy. The government took swift action and instilled several measures, including the establishment of a manicurists’ bill of rights and more protective equipment requirements for employees. In addition to these measures, the state passed a bill establishing a certificate registration for trainees learning the art of the practice. The state also activated public awareness campaigns, including speeches and pocket cards with questions every nail salon customer should ask. Now that a date has been set for the wage bond requirement, the bulk of the emergency regulations have been addressed.

If you own a nail salon in New York, you must purchase a wage bond in order to maintain your appearance enhancement license. Before you jump to purchase a policy, it’s important to understand what you’re paying for and the basic fundamentals of wage bonds. Here’s what you need to know and what to do in order to continue operating lawfully:

What’s the purpose of this wage bond?

The investigation reported several cases of unfair wages and employee underpayment. Employees claimed they earned well under the legal state minimum wage and were denied overtime benefits. This bond ensures employers pay their employees due wages and provide them with all due fringe benefits. Should a nail salon owner fail to pay his or her employees their due wages, the employees can file a claim against this bond. In the event of a valid claim, the surety company that wrote the bond will compensate employees up to the full sum of the bond. In turn, the nail salon owner must reimburse the surety company in a timely manner according to the indemnification agreement. As long as nail salon employers provide their employees with due wages and benefits, this bond is void.

How much will my bond cost?

The bond amount varies according to the number of full-time workers providing nail services:

  • 2-5 employees (or you employ the equivalent of 2-5 employees in hours worked): $25,000
  • 6-10 employees: $40,000
  • 11-25 employees: $75,000
  • 26+ employees: $125,000

The actual amount you will pay,  also referred to as the premium, is a percentage of the bond amount. It can range anywhere from 2-10%+ depending on a review of your application by the surety.

For example, if you have only five employees total, an excellent credit profile and no prior history of wage or compensation complaints, you naturally demonstrate a lower risk to the market. You will most likely receive a better rate than a salon owner on the other end of the spectrum. Again, all applications are reviewed on a case-by-case basis and no one can determine costs to you or the rate you’ll pay other than a licensed surety.

Ready to get started? Request a quote online here.


What should I do now?

Owners should begin searching for a reputable surety bond provider that is licensed to issue bonds in New York as soon as possible considering the deadline set by Gov. Cuomo this week of October 6. Since wage bonds can take longer to process due to the more comprehensive review of the applicant’s personal information and financials (subject to underwriting), it’s recommended you begin requesting quotes right away to ensure you’re getting acesss to the best rates through an experienced provider who can file on your behalf accurately and on time. If you do not post the bond by the deadline, you are subject to fines and possibly license revocation.

If you have questions, contact the New York Department of State or refer to Article 27 of the General Business Law and Section 160 of Title 19 of the New York Codes, Rules and Regulations containing relevant information for salon owners. The Department of Financial Services is the enforcing agency behind this wage bond requirement and you can access the official bond form on the DFS website.


For more information regarding these changes and the developments related to the surety industry leading up to this announcement, see our previous coverage below:

Proposed NY Nail Salon Legislation Targets Enforcement

NY Governor Implements Emergency Measures For Nail Salons

NY Launches Campaign Against Nail Salon Worker Mistreatment

Wage Bond Now Required For NY Nail Salons

Photo courtesy Diana Robinson (CC BY 2.0)

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