Worker Fired After Filing OSHA Complaint: Company Pays $753K

Here’s a cautionary tale showing how expensive retaliating against employees can be.

An employer in Rhode Island threatened and then fired an employee who filed an OSHA complaint.

This prompted the DOL to open two investigations and file a lawsuit, which was “one of the few joint cases the [agency] has ever filed involving retaliation claims asserted” under both the Occupational Safety and Health Act (OSH Act) and the Fair Labor Standards Act (FLSA), the DOL announced in a press release.  

Nail salon employee files OSHA complaint

Steven Xingri Cao owns three nail salons – New VIP Nail Spa Inc., VIP Neo Nails Inc. and VIP Spa & Nails Inc. – located in Rhode Island.

In July 2020, Cao fired and threatened an employee who was sickened by an undiluted sanitizer, raised safety and health complaints with management and then filed an OSHA complaint, the DOL’s lawsuit alleged.

Cao also threatened another employee who had a close relationship with the fired employee, the agency claimed.

Feds open dual investigations

Two agency departments – the Wage and Hour Division and OSHA – opened investigations into alleged violations of the OSH Act and the FLSA.

The agency’s investigations determined the nail salon:

• Failed to pay proper overtime compensation to employees who worked more than 40 hours in a workweek
• Did not maintain accurate work records
• Provided false information to investigators, and
• Compelled employees to sign documents that contained false information about their employment.

In the DOL’s view, the alleged conduct violated the OSH Act and the FLSA.

In February 2024, the parties reached an agreement to settle the case.

Six-figure payout to settle the case

The consent judgment permanently forbids Cao and the businesses from future violations of the OSH Act and the FLSA. The judgment also requires them to pay out $753,500, broken down as follows:

• $168,000 in OSHA compensatory, punitive and emotional distress damages to the employee who was fired for raising safety and health complaints.
• $23,500 in OSHA punitive damages to the other employee who was threatened.
• $550,000 — $275,000 in back wages and $275,000 in liquidated damages — to 70 employees for FLSA overtime violations.
• $12,000 in FLSA punitive damages to employees who were coerced to sign false employment documents.

In addition to the financial payout, the owner must also:

• Provide anti-retaliation training to supervisors.
• Post a notice in English, Spanish and Korean at each workplace explaining employees’ rights.
• Hire a payroll monitor for at least two years to evaluate FLSA compliance in the future and hire an independent safety consultant to audit the nail salons to identify any safety and health hazards.
• Arrange a meeting among nail salon owners and representatives of OSHA and the Wage and Hour Division for purposes of DOL outreach to industry employers.

“Unfortunately, workers face several types of unlawful conduct by their employers, including unfair wages, unsafe working conditions and retaliation. When workers’ rights are violated under multiple statutes, the U.S. Department of Labor will move decisively to vindicate their rights in as holistic a way as possible,” said Regional Solicitor of Labor Maia Fisher in Boston.

“This employer’s egregious actions in firing and threatening workers for raising health concerns and complaining to OSHA defy the law and place workers at potential risk,” said OSHA Regional Administrator Galen Blanton in Boston. “Discouraging or preventing workers from participating in an OSHA inspection may mask or delay identification and correction of hazards that could sicken or injure them.”

“This consent judgment — which requires payment of $562,000 in FLSA back wages and damages — sends a strong message to employers that failing to pay employees properly and retaliating against workers who assert their wage and hour-related rights can have costly consequences,” said Wage and Hour Division Northeast Regional Administrator Mark H. Watson Jr. in Philadelphia.

Info: Nail salons, owner agree to stop worker retaliation, pay $753K in back wages, damages after DOL investigations, litigation, 5/29/24.