Good Housekeeping has a discussion of the Prop 65 warning required on labels in California:

Good Housekeeping Chemist Karen Rauen says, “Dibutylphthalate or D-B-P is an ingredient used in nail polish to make the film more flexible so it won’t chip off your nails. The Dibuytlphthalate in animal studies have shown in animal studies to cause possible birth defects.”

Now, leading nail companies are reformulating their polish due to California’s Proposition 65.

Rauen says, “Many companies have started replacing the Dibutylphthalate in their formulations with other materials. Recently, Barielle and Orly have replaced the Dibutylphthalate and Sally Hansen has also replaced the dibutylphthalate but went one step further and replaced the formaldehyde as well.”

See here for the full article.