Salon Zoe is being sued by the U.S. Labor Department for allegedly firing an employee who complained about the use of a product containing formaldehyde. (credit: CBS2)

NEW YORK (CBSNewYork) — A Bronx salon has agreed to pay $165,000 to an employee who was fired after warning her colleagues about the dangers of a hair straightener containing formaldehyde.

The U.S. Labor Department filed a lawsuit against Salon Zoe after Valerie Connolly, an office manager, was fired in June 2012. The settlement, announced by the Labor Department on Monday, awards Connolly $65,000 in lost wages and $100,000 in compensatory damages for pain and suffering, government officials said.

The settlement also requies the salon to expunge Connolly’s personnel records of all references to the matter and her termination and, when requested, provide a written, neutral job reference. The company must also inform employees about their whistleblower rights under the Occupational Safety and Health Act.

“There’s a simple message here: Don’t fire, discriminate or retaliate against your employees when they raise legitimate health and safety issues; there will be consequences,” Jeffrey Rogoff, the regional solicitor of labor in New York, said in a news release. “The department will pursue appropriate legal actions, including lawsuits, to ensure that workers’ rights are protected.”

Connolly, a mom from Yonkers, told CBS2 in April that she began experiencing serious health issues while working at Salon Zoe, at first unexplainable by doctors.

“Problems breathing. I was bringing my son into school one day, and I could barely make it to the door,” she said. “I never had asthma before.”

With no answers, she started to look into products used at Salon Zoe, where she worked for more than seven years.

Connolly discovered that the salon used a product called Magic Keratina, containing formaldehyde. She was so concerned she handed out information warning coworkers.

“Just explaining to them what exactly it (formaldehyde) was and how dangerous it was,” she said.

She was fired days later.

“She believed there was a health hazard. She complained about it, and she was fired because she complained,” said Elena Goldstein, senior trial attorney for the U.S. Department of Labor’s Office of the Solicitor. “No worker should be fired because they complain about dangerous conditions on the job.”

As a result, the Labor Department sued the salon and its owner, Kristina Veljovic, for discrimination.

The Occupational Safety and Health Administration says some levels of formaldehyde are acceptable. But OSHA did cite Salon Zoe in 2012 for not training employees about formaldehyde and other hazardous chemicals.

Connolly’s doctors later confirmed that formaldehyde was the cause of her symptoms. Since being away from the salon, they have subsided.