How a Dairy Queen Labor Lawsuit Reached $6M in New York

A Long Island Dairy Queen labor lawsuit in New York ended in a $450,000 settlement in 2024 after two sisters who owned the Medford franchise were sued for paying their workers every two weeks instead of weekly, as state law requires for “manual workers.” The case, Valdez v. Michpat & Fam, LLC, exposed the owners to a potential $6 million judgment and became one of the examples that pushed New York lawmakers to curtail damages for pay-frequency violations in 2025.

What the Sisters Were Sued For

Patty DeMint and Michelle Robey opened a Dairy Queen Grill & Chill in Medford, on Long Island’s south shore, in December 2017, through their company Michpat & Fam, LLC.¹ In 2019, a former employee filed suit alleging unpaid overtime. The sisters contested the claim for about a year, maintaining the employee had been paid everything she was owed.²

On June 9, 2020, plaintiff Jessica Valdez filed Valdez v. Michpat & Fam, LLC in the U.S. District Court for the Eastern District of New York. The complaint named the company and Patricia Nappo (DeMint’s legal name) and alleged unpaid overtime, minimum-wage violations, missing spread-of-hours pay, and failures to provide required wage notices.¹

The claim that mattered most was none of those. It was pay frequency. DeMint and Robey had been paying staff every two weeks. New York Labor Law Section 191 requires employers to pay “manual workers” weekly, within seven days of the end of the week in which the wages were earned. The state Department of Labor treats anyone who spends more than 25 percent of their working time on physical labor as a manual worker, and fast-food employees qualify easily.³ The sisters said their payroll company had never flagged the biweekly schedule, and neither had state labor auditors.²

The individual overtime dispute grew into a class action after law firms began soliciting former employees through social media, a pattern that played out at thousands of New York retail and fast-food businesses.⁴ In January 2022, the court certified a federal collective of hourly crew members, assistant managers, and managers employed from April 2018 to April 2021, and a state-law class covering similar employees paid biweekly from December 2017 through March 2020.¹

How a Small Franchise Faced $6 Million

The outsized exposure came from a 2019 appellate ruling, Vega v. CM & Associates Construction Management, LLC. The First Department of the New York Appellate Division held that manual workers paid biweekly could sue for liquidated damages equal to 100 percent of their late-paid wages, even if they eventually received every dollar they were owed.⁵ Combined with a six-year statute of limitations, the math turned ordinary payroll practices into millions in potential liability. Labor law attorney Howard Wexler told CBS News the ruling made employers “liable for essentially double the amount of what their earnings were.”⁴

For a single store with roughly 200 former employees in the class, the exposure reached about $6 million.

What the Settlement Cost Them

DeMint and Robey were advised they had no realistic defense; the biweekly schedule was a documented fact. They settled for $450,000. About $305,000 of that went to attorneys’ fees and costs, leaving each of the roughly 200 class members with less than $200.⁶

To pay it, the sisters liquidated retirement accounts, borrowed from friends and family, and posted their mother’s home as collateral. As of mid-2025 they still owed $150,000 in settlement and legal costs, and by summer 2024 they were considering selling the restaurant.²⁷ Robey called the outcome “bittersweet” and told reporters, “we still have to pay a half million dollars, and it’s an expensive lesson.”⁶

The Weekly-Pay Rule Behind the Case

Section 191 is a Depression-era statute meant to protect workers who depend on prompt, regular wages. Employers can apply to the state Department of Labor for permission to pay less frequently, but the process requires payroll records, a CPA letter, proof of insurance, and (for large employers) at least 1,000 New York employees over three years.⁸

For most of the statute’s history, violations drew only minor administrative penalties. The Vega ruling changed that in 2019 by opening the door to private lawsuits with liquidated damages. One industry estimate put potential annual exposure for a 100-employee business at $2.5 million just for paying biweekly.⁹

Not every court agreed. In January 2024, the Second Department of the Appellate Division ruled in Grant v. Global Aircraft Dispatch, Inc. that Section 191 does not give workers a private right to sue at all, and that enforcement belongs to the state Department of Labor.⁵ That split between the two Appellate Division departments covering most of the state’s population is pending before the New York Court of Appeals.¹⁰

What Changed in 2025

On May 9, 2025, Governor Kathy Hochul signed a budget bill (Assembly Bill A3006C, Chapter 56 of the Laws of 2025) that sharply narrowed damages for pay-frequency violations.¹¹

For a first-time violation, if the employer pays manual workers at least semi-monthly on a regular payday, liquidated damages are eliminated. Workers can recover only lost interest on their delayed wages, calculated at the Department of Financial Services’ annual rate, currently 16 percent per year, or roughly 0.3 percent per week.¹² Employers already subject to a prior court order or DOL finding for a frequency-of-pay violation remain liable for liquidated damages equal to 100 percent of the late wages.⁹

The amendment took effect immediately and applies to all causes of action pending or filed on or after May 9, 2025.¹³ Employers are still required to pay manual workers weekly unless the DOL authorizes otherwise; the change limits the price of a first mistake, not the underlying rule. The reform does not apply retroactively to settled cases like the Dairy Queen matter.

1
GovInfo. Valdez v. Michpat & Fam LLC, No. 20-cv-2570
2
AOL. NY Sisters DQ Owners Hit With Lawsuit
3
New York State Senate. New York Labor Law Section 191
4
CBS News. Long Island Dairy Queen Biweekly Paychecks Lawsuit
5
NY Courts. Grant v. Global Aircraft Dispatch Inc.
6
Daily Voice. GoFundMe Started for Medford DQ Sisters After Lawsuit
7
Suffolk County News. Labor Law Opens Local Business Up to Lawsuits
8
NY Dept. of Labor. Frequency of Pay
9
Seyfarth Shaw. New York Sharply Curtails Damages for Weekly Pay Violations
10
Fox Rothschild. New York Appellate Courts Split Over Whether Individuals Can Sue for Frequency-of-Pay Violations
11
New York State Senate. A3006C — Laws of 2025 Chapter 56
12
New York State Senate. New York Labor Law Section 198
13
Reed Smith. New York Amends Labor Law to Stymie Flood of Frequency-of-Pay Lawsuits