The Medford Dairy Queen owners and sisters, Michelle Robey and Patricia DeMint, of Center Moriches, were recently hit by a class action lawsuit, which included a decades-old labor law aiming to protect manual laborers, possibly forcing them to consider selling.

THE LAW

New York State Labor Law requires “manual workers” to be paid weekly. According to workers’ rights unions, the law protects laborers living paycheck to paycheck.

However, the term “manual laborer,” according to Sen. Dean Murray and Robey, is vague and should be better defined by the Department of Labor.

Additionally, as per the NYS Department of Labor, the law has certain exemptions for employers who meet certain criteria to apply for permission to pay manual workers less frequently than weekly. Small-business owners do not fit their criteria if they do not have over 1,000 employees.

Currently, as part Section 191(1)(a) of the New York Labor Law, a manual worker is defined as a “mechanic, workingman or laborer” or an individual that spends more than 25 percent of working time engaged in “physical labor.”

The vagueness of the definition, according to Murray, has opened up the law to interpretation and made small businesses vulnerable to lawsuits.

In 2019, a private right of action for such claims was established in Vega v. CM & Associates Construction Management LLC, finding that a manual worker who was paid in full, but late/biweekly, could state a claim seeking liquidated damages in the amount of 100 percent of the late wages, which equates to 50 percent of their annual wages, over a lookback of six years if being paid bi-weekly. However, business groups believe no damages should be paid if wages were paid in full.

THE DAIRY QUEEN SISTERS’ LAWSUIT

Such has happened to Robey and DeMint, who settled in a class action lawsuit earlier this year in the amount of $750,000 from the original $6 million. Over 50 percent of the max settlement will be made to the attorneys, according to Robey, while a total of the $450,000 maximum payment will be spread out to over 200 employees.

None of which, she said, they are able to afford without liquidating retirement accounts, and possibly, if it comes to it, the Medford Dairy Queen. The first payment of $150K was due in March—the retirement account helped pay for that. Now, the sisters still owe $75,000 every six months for two years.

“The lawyers structured it so they would get 1/3 of the larger payment,” Robey said. “The employees are getting pennies on the dollar, which is further proof that these lawsuits don’t help the employees, they help the lawyers.”

Additionally, the lawsuit was originally assumed to be filed as an overtime dispute claim in 2020 by a former employee who was fired in 2019. The dispute, however, also included the frequency of pay lawsuit for being paid biweekly instead of weekly. The lawsuit never went to trial and each alleged issue was never litigated separately. 

“We would have definitely gone to trial if it was just the overtime issue because we could have proven everyone was paid for any overtime they worked, but we would have lost the labor law claim anyway, which is where the majority of the damages were; only 12 people opted in to the overtime suit, whereas there are over 200 for the frequency of pay issue,” Robey explained, noting that of those 200 employees, they did not opt in but were rather automatically included for not specifically opting out. “Many thought by not opting in, they were making a statement that they were siding with us.”

According to Robey, all of the hours were fully documented with a punch in and out system and a payroll app.

THE PLANTIFF’S ATTORNEY

However, according to the plaintiff’s attorney, Borelli & Assox of Garden City, claimed the defendants have been portrayed as “victims” who got the law wrong about weekly pay.

“In truth, the failure to pay weekly wages claim was just one claim in that case. There were several others, including that DeMint and her company failed to pay overtime wages pursuant to a systematic scheme of falsifying records of hours worked in a given week, flat out deleting hours that their employees logged, requiring workers to work off-the-clock hours, and forcing them to work shifts of more than 10 hours without paying spread of hours premiums,” the firm wrote in a statement, noting that he believes it is the reason they decided to settle.

Robey and DeMint’s attorney, Jason L. Abelove, said he disagrees with Mr. Borelli that there was evidence of falsification of records or a failure to pay overtime. “This case, at its heart, is a frequency of pay case,” he said.

SUPPORT FROM THEIR EMPLOYEES AND COMMUNITY

Current employee and shift manager, Evelyn Enriquez, 19, of Mastic Beach, said she has been working for DeMint and Robey since she was 14 and has never had any issues with her paychecks, nor has anyone in her family or any of her co-workers.

“My entire family has worked at Dairy Queen,” she said. “Overall, I would describe my work experience at Dairy Queen as a learning experience that would later prepare me for my career.”

As for the treatment of their employees, Robey and DeMint said they are known for providing their employees more than just a paycheck.

“We give them a place to feel valued and connected to others. We provide emotional and financial support,” Robey said, noting they have given out multiple zero-interest loans. “We give a lot of second chances, including the employee who filed the suit. We hire people with special needs, people on work release, and people recovering from addiction.”

They have also facilitated the donation of a car for an employee, personally housed team members who fell on hard times, have paid for two funerals for team members who did not have family who could afford the services, provided counseling for their team, delivered Christmas presents to the homes of every team member with children on Christmas morning, personally delivered food and money to families during COVID, hosted a small wedding reception, and graduation parties.

Anthony Pelella, pastor of the Medford Axis Church, validated the sisters’ community service efforts.

“I have been a pastor in the Patchogue-Medford community for almost 27 years; in all that time I have seldom met business owners as selfless, giving, and compassionate towards their employees and community as Michelle and Patty, the DQ sisters,” he said.

“We truly love our team—and they find a sense of belonging with us that they cannot find at larger companies, where they are just a cog in the wheel,” Robey added. “We make a difference.”

THE BI-WEEKLY PAY ISSUE

Robey said they were “blindsided” by the lawsuit and are now held liable for hundreds of thousands of dollars. Between 2017, when they opened, and March 2020, when they voluntarily decided to go to weekly pay to help their employees during COVID, workers previously were paid biweekly.

“We had absolutely no idea that this was any sort of violation of the law,” she said. “We have no issue with paying our employees weekly. The issue is we had no idea that this was a law/requirement.”

Upon opening the business, the sisters, she said, decided on biweekly after doing research, getting support from their accountant, and due to DeMint being paid throughout the entirety of her career in the fast-food industry, including Wendy’s and McDonald’s.

“I was in fast-food for 25 years before we opened this DQ. Everyone was always paid biweekly,” said DeMint. “I grew up believing wholeheartedly in the American dream. And now I really don’t know what to believe anymore.”

Additionally, Robey said ADP, her payroll company, never alerted her to an issue nor did she receive any violations after a comprehensive audit of over 200 documents done by the NYSDOL, detailing their payroll records in 2018. In the report, there was no indication about the biweekly pay being an issue.

“If the Department of Labor doesn’t know its own law and the definition of manual labor worker, how can we be expected to?” Robey questioned. “Unless something is done about this issue, literally thousands of other small businesses in New York could be completely devasted.”

The sisters have been advised to settle due to the cost in legal fees, despite wanting to fight it. Now, Robey said, she is committed to bringing awareness to the issue and changing the legislation.

“Many other larger companies, who have the means, have settled these, but I really want to fight for us small-businesses owners who do not have the means to just settle, and for whom action under this new ruling will prove devastating, both personally and professionally,” she said.

PROPOSED BILLS TO CLEAN UP THE LAW

Murray has since sponsored two bills to help prevent similar occurrence, including S.6108, which relates to the definition of manual worker and providing such workers’ primary duty is to engage in physical labor; and S.6077, which relates to wage claims for manual workers, establishing an exception is provided from certain legal relief for instances of when payment is made within 14 calendar days after the end of the week in which the wages were earned.

“This is blatantly unfair to these business owners,” Murray said. “Every worker got every penny that they earned, there was no theft of anybody’s wages and no damages.”

Sen. Kevin Thomas also formerly introduced a bill - S9511, which recognizes the employee’s private right of action, but limits penalties to $1,000 for the first violation, $2,000 for the second and $3,000 for the third.

The legislation, though, included in the Governor’s 2024 budget, did not pass through the legislature. Murray hopes his legislation will be included in the 2025 budget and finally pushed through the legislature next year. According to Gov. Kathy Hochul’s press secretary Gordon Tepper, she plans to review the legislation if it passes in both houses of the legislature.