THE owners of a Dairy Queen in Long Island were slapped with a $6 million fine for paying their employees every two weeks instead of weekly.
The franchise, which is owned by sisters Patty DeMint and Michelle Robe, is said to have violated a New York pay frequency law that dates all the way back to the Great Depression era.
Two owners of a Dairy Queen in New York were sued over the frequency of employee pay[/caption]
DeMint and Robe bought the Medford-based Dairy Queen after they pooled all of their money together, and then one lawsuit in 2019 put them at risk of homelessness.
It turned out the pair were unknowingly breaking the state’s “Frequency of Pay” law, which was established during the depression to prevent wage theft.
The law requires “manual workers” to be paid weekly, and gives examples of those workers as “a mechanic, workingman or laborer” who “spends more than 25% of working time engaged in” physical labor.
Robey remembered how shocked both of them were when the 2019 case turned into a flood of lawsuits, which came to $6 million.
She said: “It was ridiculous to us because we knew we paid every employee every dime that they were owed
“Everyone we had spoken to was like, ‘This can’t be right. This can’t be right. You must be reading it wrong. There’s something wrong.’
“It was so unbelievable.”
The sisters were initially being sued by a former employee of theirs who anonymously claimed that they weren’t properly paid for their overtime.
This claim then snowballed into a class action against the two, which accused them of “very serious labor violations against … employees including withholding paychecks without reason, refusing to pay overtime wages, [and] shifts in excess of 10 hours without legal compensation.”
Both sisters denied the allegations and believed that the first claim was made because of the employee’s anger over their termination.
DeMint said of the employee: “She would say all the time, ‘I’m gonna get you, I’m gonna get you,’ and she did.”
FIGHTING BACK
Before long, the class action was made up of thousands of separate cases, according to Howard Wexler, a labor law expert and partner with Seyfarth Shaw LLP.
Wexler explained: “It’s easily in the thousands in terms of lawsuits.
“It took what was a law that required you to pay your employees weekly into more of a ‘gotcha’ based on technical violation.”
What’s a class-action settlement?
Class action lawsuits offer groups of people, or ‘classes,’ a way to band together in court.
These suits are often brought by one or a few people who allege a company or other entity has wronged a large group of people.
When a suit becomes a class action, it extends to all “class members,” or people who may have similar complaints to those who filed the suit.
Companies often settle class actions – offering payment to class members who typically waive their right to pursue further legal action by accepting money.
These payout agreements frequently include statements by the defendant denying wrongdoing. Companies tend to settle class actions to avoid the costs of further litigation.
Pollution, discrimination, or false advertising are a few examples of what can land a class action on a company’s doorstep.
DeMint and Robey sought to change the law around pay frequency in New York.
State Sen. Dean Murray took action and argued that the workers didn’t need protection because they got everything they were owed.
The action was shot down by the New York State Trial Lawyers Association.
Brian Schneck, with the labor union UAW Local 259, said that while what had happened to the sisters was “horrible…the law is the law“.
THE OUTCOME
In May, New York Governor Kathy Hochul closed the floodgate of lawsuits by making a change to the state legislation.
She ordered businesses that pay every other week to now only owe the interest on the late wages.
Unsatisfied with the solution, DeMint and Robey eventually settled out of court for $450,000.
Murray hailed the sisters as “heroes of New York businesses.
“I mean, every business in New York should be applauding them and thanking them.”
The claimants stand to earn less than $200 each, while $305,000 is going to cover lawyer fees.
Robey, who, along with her sister, has set up a GoFundMe to help them get back on their feet, called the whole situation “an expensive lesson”.
The pair has currently raised less than $3,000 from 70 donations at the time of writing.
Robey remembered how shocked both of them were when the 2019 case turned into a flood of lawsuits, which came to $6 million[/caption]
