When Tanya and Melissa Romero, two sisters from upstate New York, opened their first Dairy Queen franchise in 2017, they thought they were living the small-business dream. The store, located in Watertown, became a local favorite almost immediately. They hired a team of high schoolers, single parents, and retirees, offering flexible schedules and what they believed fair pay.
But last year, that dream turned upside down when the sisters were hit with a $6 million class-action lawsuit for one seemingly harmless decision: paying their hourly workers every two weeks instead of weekly.
Under New York’s Labor Law §191, “manual workers” broadly defined as anyone who spends more than 25% of their time doing physical labor must be paid weekly, not biweekly. The rule, written decades ago to protect factory workers, applies even to modern service jobs.
“We had no idea this even existed,” said Tanya Romero. “Our accountant, our payroll company, even our franchise rep no one flagged it.”
The lawsuit, filed in Jefferson County Supreme Court, accuses the Romeros of violating state labor laws despite paying all wages on time and in full. The claim hinges on a technical interpretation that allows workers to seek liquidated damages often double the wages owed even when there’s no delay or underpayment.
The sisters later joined a coalition of small business owners lobbying Albany to close this loophole. Their advocacy helped lead to a reform passed earlier this year. But for them, the fix came too late their case remains active, and their livelihood hangs in the balance.
$6M Lawsuit – Overview
| Defendants | Tanya & Melissa Romero, DQ franchise owners in Watertown, NY |
| Filed | March 2024, Jefferson County Supreme Court |
| Plaintiffs | Former Dairy Queen employees (class of 24) |
| Claim | Violation of NY Labor Law §191 (manual worker pay frequency) |
| Alleged Damages | $6 million in statutory penalties |
| Resolution Status | Pending as of November 2025 |
| Legislative Change | Amendment to §191 passed June 2025, limiting damages for timely-paid workers |
| Potential Impact | Precedent for thousands of small businesses statewide |
Background of the Lawsuit
New York’s manual worker pay law dates back nearly a century, originally meant to protect factory laborers from wage theft and long delays. But in recent years, plaintiff attorneys have revived it as a new frontier for class-action litigation applying it to fast-food workers, cashiers, and even delivery drivers.
Because the law allows damages even when pay is not late, courts have interpreted biweekly pay as an automatic violation.
“The law was well-intentioned, but the interpretation created a cottage industry of lawsuits,” said Thomas Greer, labor attorney and adjunct professor at Columbia Law School. “Businesses who never shortchanged anyone suddenly found themselves facing millions in exposure.”
For small operators like the Romeros, who relied on payroll systems aligned with corporate guidance, the rule came as a shock.
“Every Dairy Queen, Burger King, and Dunkin’ Donuts in the state was doing this,” said Melissa Romero. “We weren’t cutting corners we were following the same pay schedule used by thousands of franchises.”
What is the Lawsuit?
The lawsuit, Smith et al. v. Romero Enterprises LLC, claims that employees who scooped ice cream, cleaned machines, and handled inventory qualified as “manual workers.” Because they were paid biweekly instead of weekly, they are entitled to “liquidated damages” under §191 even though every check was delivered on time.
“The statute is clear,” said Laura McGowan, the lead attorney representing the employees. “Workers classified as manual employees must be paid weekly. It doesn’t matter if the employer meant well or if payments were timely.”
Legal analysts say these cases have exploded across New York since 2019, when an appellate court confirmed that employees could sue for damages even without delayed payment. Settlements have ranged from $250,000 for small retailers to multi-million-dollar payouts for national chains.
The Romeros’ case is among the most visible because of their public role in advocating for reform. The sisters testified before the New York Senate Labor Committee in April 2025, describing how the law turned a routine payroll cycle into a financial nightmare.
“We weren’t asking for a free pass,” Tanya said during testimony. “We were asking for fairness to treat timely-paying employers differently from those who exploit workers.”
Abou the Reform
After mounting pressure from small business groups, lawmakers amended Labor Law §191 in June 2025, clarifying that workers cannot claim damages if they received full, on-time pay. The new version also gives employers 30 days to correct pay frequency issues before lawsuits can proceed. Governor Kathy Hochul signed the bill, calling it a “common-sense correction.”
“The intent of labor law is to protect workers from wage theft not punish employers who pay their staff in full,” Hochul said in a statement. “This reform restores that balance.”
The amendment was celebrated across the state’s business community, but it didn’t apply retroactively leaving the Romeros and hundreds of other defendants still facing suits filed before the change.
“It’s justice delayed,” said Anthony Caruso, president of the New York Small Business Coalition. “These families helped push through the fix, but they’re still trapped under old cases that never should’ve existed.”
Financial Strain
For Tanya and Melissa, the stress has been overwhelming. Their store employs 28 people, and legal costs have already exceeded $150,000. They’ve refinanced their home and borrowed from family to keep the business open.
“We’ve cried more this year than we ever have in our lives,” Melissa admitted. “We love our employees we just didn’t know the rule. Now we’re fighting to survive a system that feels broken.”
Their situation resonates with many other small business owners who operated under similar assumptions. According to the New York Retail Federation, more than 1,000 small employers have been targeted by §191 lawsuits since 2020.
“This is not about dodging accountability it’s about proportionality,” said Greer, the labor law expert. “A technical payroll error shouldn’t bankrupt a family-run business.”
What are the Policy Implications from the Lawsuit?
The Romero case underscores a broader challenge in labor regulation updating old rules to fit modern employment realities. While the intent behind §191 was to protect vulnerable workers, its interpretation blurred the line between exploitation and administrative oversight.
Some experts say this reflects a larger trend: legal systems struggling to keep pace with economic modernization.
“Laws need to evolve with the workplace,” said Karen Whitman, deputy commissioner at the New York Department of Labor. “This case shows what happens when outdated statutes collide with everyday business operations.”
Moving forward, the Department has pledged to conduct more employer outreach, educating small business owners about wage and pay frequency compliance before issues reach the courts. As of November 2025, the Romeros’ case remains unresolved, though settlement discussions are underway. Their store continues to operate a symbol of both resilience and the fragility of small business under complex regulation.
The sisters say their fight was never about escaping responsibility but about preventing others from enduring the same ordeal.
“Our goal is to make sure no one else gets blindsided like we did,” Tanya said. “If we can survive this, maybe it’ll mean something.”
Quick Facts
| Key Point | Summary |
|---|---|
| Law Involved | NY Labor Law §191 (manual worker pay frequency) |
| Required Pay Cycle | Weekly for manual workers |
| Violation Basis | Paying biweekly, even if wages were timely |
| Commonly Affected Industries | Food service, retail, manufacturing |
| Reform Date | June 2025 (not retroactive) |
| Penalty | Up to double the wages paid over the violation period |
FAQs
Why were the sisters sued if workers were paid on time?
Because New York law required weekly pay for manual workers, even if payments weren’t late.
What counts as a “manual worker”?
Anyone who spends over 25% of their time performing physical labor.
Did the law change?
Yes, in June 2025 but the reform isn’t retroactive.
Are other small businesses affected?
Yes, over a thousand New York employers have faced similar lawsuits.
Can the Romeros still be fined under the new law?
Yes, because their case was filed before the reform took effect.