Dallas Business Law Blog

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After Pit Stop in Appeals Court, Buc-ees Loses Retention Agreement Case

Buc-ees is America's favorite gas station, and it may have the cleanest bathrooms in the world, but the Houston-based 14th Court of Appeals found its retention pay policy less than sanitary. In 2013, Buc-ees sued a former employee for violating a a retention pay agreement, and won close to $100,000 in damages and attorney's fees. In October of 2017, the 14th Court of Appeals held that the retention agreement with the former employee was an unreasonable restraint on trade, and reversed the trial court's judgment by ordering that Buc-ees take nothing on its claims. The time for Buc-ees to appeal to the Texas Supreme Court has now passed. 

The Story.

Kelly Rieves was hired to work as an assistant manager at the Buc-ees in Cypress, Texas in 2009. She entered into an Employment Agreement with Buc-ees, which classified her as an "at-will" employee, meaning that Buc-ees could terminate the agreement at any time. The Employment Agreement included split her pay into two categories: salary and retention pay. If Rieves failed to work at Buc-ees for 48 months, she was required to repay all of the retention pay received, which totaled approximately one-third of her total pay. In 2012, after working for about three years, Rieves resigned. Buc-ees demanded that she repay $66,720.29 in retention pay. Eventually, the parties ended up in litigation, and Buc-ees won close to $100,000 in damages and attorney's fees. The Court of Appeals found that the Retention Agreement imposed a penalty on Rieves for exercising her right as an at-will employee to resign her job. The appellate court ordered that Buc-ees take nothing against Rieves, and remanded the case back to the trial court to determine whether Rieves should recover her attorney's fees from Buc-ees. Read the opinion here.

The Basics of Retention Agreements. 

In short, a retention agreement involves a specific sum of money offered to an employee to keep that person from leaving. Generally, businesses use retention agreements to provide a financial incentive to crucial employees to keep that person from leaving prior to some date certain. Typically, these agreements are used with high level executives. Usually, these agreements identify a specific period of time for which a portion of the employee's compensation may be recovered by the employer if the employee resigns. In Texas, they are enforceable so long as they include reasonable limits and do not impose a substantial penalty on the employee when exercising his or her right to resign an at-will position. 

Take Away. 

If your business plans on using retention agreements to retain employees, consult with knowledgeable employment counsel to make sure that they do not impose a greater restraint on the employee than necessary to protect the employer's business interest. 

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