Owners Natalie Phan and her husband, Bill Dong, operated five salons at the time of the lawsuit, including one in Palo Alto. Now they operate four in Menlo Park, Redwood City, San Mateo and Los Gatos.
San Mateo County Superior Court Judge Marie Weiner gave preliminary approval of the $750,000 settlement.
The original suit was filed in San Mateo County Superior Court in September 2011, accusing owners Ms. Phan and Mr. Dong of not providing overtime pay or meal breaks, and confiscating a portion of tips.
The suit also accused the owners of "unlawfully deducting amounts from employee wages for minor infractions like dropping nail polish," according to news release from the Asian Law Caucus, one of three law groups representing the plaintiffs. The other two firms were Legal Aid Society-Employment Law Center and Davis Cowell & Bowe LLP.
Winifred Kao, an attorney with the Asian Law Caucus, said the next step is for the 125 employees to review the settlement and decide whether they want to continue to take part in the class-action suit, to opt out or to sue separately.
The next court date is set for June 27, when eligibility and distribution will be decided.