Story in the HoustonPress reports a former employee of the popular Buc-ee's convenience store chain is being sued for more than $60,000.00 for allegedly violating what is called a retention agreement.
The employee in question, Kelly Rieves, was hired by the store as an assistant manager in Cypress, Texas for total compensation of about $55,000. She was hired as an at-will employee, meaning that the company could fire her for any reason at any time. But Buc-ee’s required her to sign an employment contract that is uncommon in the convenience store industry. It's called a "retention agreement".
What is a "Retention Agreement"?
The contract Rieves signed divided her pay into two categories, regular pay and “retention pay." The amount allocated to "retention pay" accounted for approximately one-third of her total compensation. The contract allowed the store to recoup the retention pay should she fail to remain employed for a full 48-month term. The contract also required Rieves to give six months' notice before leaving. This is despite the fact that the company maintained the right to terminate Rieves prior to the end of the period. (The contract may or may not have contained notice provisions in favor of the employee that I am not privy to but it would not be required to have such provisions under Texas law.)
Three years later, Rieves decided to leave her job a year or so before her contract expired. We don't know her reasons but we do know she tried to work it out with the company first but her boss refused to let her out from under the contract. So she quit.
In response, Buc-ee’s sued her for the full amount of the retention pay she earned during her three years with the company -- an amount over $67,000.00.
Are Retention Agreements Legal?
In a word, yes. If drafted properly, retention agreements can be enforced against employees in Texas. However, it is highly unusual to see such an agreement used with anyone other than high-level company executives.
In the case of Ms. Rieves, a trial court ruled in favor of the company last fall. And it gets worse. The Court also ruled that, in addition to the original sum she owed under the contract, she was also responsible for the company’s legal fees plus interest on the retention pay since she left Buc-ee’s.
The total the company is now seeking from Rieves approaches $100,000. The matter is currently on appeal.
The Moral of the Story.
Don't sign an employment contract without having an attorney review it for you. Don't sign an arbitration agreement without having an attorney review it for you. Just don't!
As a lawyer who primarily represents employees, I spend a fair amount of my time trying to help workers get out of contracts that they never should have signed in the first place. It is an uphill battle.
The time to negotiate or get changes to employment-related contracts is BEFORE you sign them. Companies do not necessarily have your best interests at heart. You need to understand the implications of what you are signing BEFORE you sign it. A couple hundred dollars spent on lawyer contract review may seem like a lot when you are excited about starting a new job, but compared to the economic havoc that can be caused by signing a contract you don't understand, it's peanuts.
Get the information you need to protect yourself and your family. It may be the best money you ever spend.