Buc-ee’s Sues Former Employee for Violating Retention Agreement / Non-Compete

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.

More: Read the entire story from the HoustonPress here.

Non-Compete Agreements Are The New Black, Part 1

As employment lawyer Eric Meyer put it last week in his article on the subject, "orange non-competes are the new black." They are increasingly being used by employers everywhere against all types of employees - from "tech workers to sandwich makers." Recent statistical studies indicate that one in four workers have signed a non-compete in their lifetime and 12.3 percent all workers are bound by one right now.

These numbers will understandably vary widely from state to state and from industry to industry. From my own experience working with hundreds of Texas employees in non-compete cases, it would not surprise me if the numbers are even higher for Texas workers.

In his article, Meyer indicates his surprise that so many employees who are presented with a non-compete agreement simply sign it without protest. He was also surprised by the relatively small percentage of employees who try to argue with their employer about the issue.  The Washington Post article to which he refers notes the following:

“And overall, only about 10 percent of workers who’ve signed a non-compete ever try to argue over it, with most assuming that it’s either not negotiable or that doing so would cause tension with an employer.”

In my personal opinion, non-compete agreements are morally justifiable only in the most extreme cases -- situations in which employees truly will be given access to real trade secret information that would obviously cause serious harm to an employer if it got into the hands of a competitor (think secret recipe of eleven herbs and spices). This is a very small percentage of workers. And yet we see that more and more employees are being asked and are agreeing to sign such agreements and thereby damage their ability to work in their chosen field should they be fired or choose to leave their employer.  Why?

I think there are a few reasons for this phenomena:

• An actual or perceived weak bargaining position. -- A majority of the time non-competes are presented at or just after the point of a job offer being made. Employees believe that if they want the job then they have no choice but to sign the agreement.

• Employees don't realize what they are signing. -- Many times employers slip non-compete agreements in along with the 30 other documents that a new employee must sign on his or her first day. They then rush them through the process and absolutely do not encourage the new employee to actually take the time to read and consider the documents they are signing. I would estimate that 30%-40% of those who consult with me because they have been sued or threatened with a lawsuit relating to a non-compete state they were not even aware that they had signed such an agreement.

• An incorrect belief that such agreements are not enforceable. -- The enforceability of non-compete agreements is largely a creature of statute and varies dramatically from state to state but here in Texas such agreements are, generally speaking, very enforceable. But this wasn't always the case. As big business interests have increased their stranglehold of Texas' legislature and its courts over the last 20 years, the law regarding non-competes has done nearly a full 180. Non-compete agreements - once considered to be not worth the paper they were written on - are now as good as gold. Yet people's perceptions of such agreements have been slow to catch up.

So, given this state of affairs, what should an employee who is presented with a non-compete do to protect himself or herself? I'll address this in a follow-up post next week.

How to Hire An Employment Lawyer

So you need to hire an employment lawyer but you don’t know how to get started? This article is for you.

Hiring a lawyer to guide you through an employment-related dispute can be challenging. Unlike cases involving personal injury matters, there aren’t hundreds of employment lawyers running TV advertisements in an attempt to get you to “Call now!” Quite the opposite is true in fact.

Due to the complicated statutory nature of employment law practice, there are likely only a small handful of lawyers in even a relatively large city who are board certified to represent employees in employment-related disputes. The few who are qualified and have the years of experience you should be looking for will likely be extremely busy because there are so few of them. For this reason it is important that you do some research and get your own materials together before you start making calls.

To get you started, I've prepared a handy guide outlining some of the basic steps you need to take.

Step 1 - Do A Little Research Online. 

Before you pick up the phone and start making calls, pick up your mouse and start making clicks. Many good employment lawyers will have a website and/or a blog that will provide you with a lot of quality information about employment law issues. Take a look at what practice areas in which the lawyer claims he or she practices. You don’t want a jack-of-all-trades-master-of-none attorney for your case. You want someone who concentrates the majority of his/her practice on employment law issues. You could also search legal directory avvo.com to help you find local lawyers who represent employees. It isn’t a perfect system but it will give you a good list to start your research.

Step 2 - Check For Board Certification

Lawyers are not required to be Board Certified in employment law to practice it in Texas. Some states don’t even provide for board certifications. But in Texas, the State Bar of Texas does provide Board Certification to those lawyers who practice employment law for a sufficient period of time, provide recommendations from lawyers and judges who they have practiced with and who pass a lengthy examination process. You can learn more about Board Certification here.

Step 3 - Expect To Fill Out A Questionnaire And Pay A Fee For A Consultation

Many firms have developed questionnaires. These are not idle exercises. You must fill them out to help your lawyer understand your case so he can better help you. Plus, filling out these short (usually electronic) forms may save you money. Some attorneys use short electronic forms as an initial screening tool for the many potential client contacts they receive each day. Sometimes, the form indicates a simple question for which a quick answer can be provided. Other times, the type of case being described would be better handled by another lawyer who specializes in that specific niche — you can usually get that referral set up at no cost. Then, if the form indicates an issue on which a lawyer believes he or she can provide meaningful assistance, a full, in-person consultation can be scheduled.

Most attorneys charge a small consultation fee to review employment-related matters. Because employment law is very fact specific, an employment lawyer needs to know all the facts of your case before he or she can commit to representing you. This often takes time. If employment lawyers are not paid something for this, they cannot stay in business.

Step 4 - Prepare For Your Consultation

Once you have a consultation with an employment lawyer scheduled, it is important that you prepare to make the most of the time you will have with the lawyer. I have written an article discussing the initial consultation in more detail, including tips on what to bring and how to prepare for this important meeting.

Non-Competes Are Out of Control

A recent New York Times article discusses the fact that employers are feeling increasingly free to abuse non-competes and force all types of employees, from camp counselors to hairdressers, to agree to them in order to keep their jobs. The article notes:

Noncompete clauses are now appearing in far-ranging fields beyond the worlds of technology, sales and corporations with tightly held secrets, where the curbs have traditionally been used. From event planners to chefs to investment fund managers to yoga instructors, employees are increasingly required to sign agreements that prohibit them from working for a company’s rivals.

The United States has a patchwork of rules on noncompetes. Only California and North Dakota ban them, while states like Texas and Florida place few limits on them. When these cases wind up in court, judges often cut back the time restraints if they’re viewed as unreasonable, such as lasting five years or longer.

As noted in the article and by Rob Radcliff in his blog post on the subject this week, Texas employers have great leeway in how they use noncompete agreements. As a result, noncompete abuse has come to be seen as just a normal business practice in the state.  Radcliff writes:

The reason behind non-competes appearing in more industries and occupations is because there is no downside for an employer to insist on such a covenant.  First off, a Texas employer can include and insist on a non-compete or non-solicit and then choose not to enforce it.  So the employer gets the benefit of intimidating or at least making an employee think twice about moving to a competitor but then never sue.  The employer could also send the former employee and their new employer some type of demand letter letter and force some type of dialogue or resolution.  Basically, the employer can us the threat of enforcing the non-compete without having a court every construe its terms or determine whether it is actually enforceable.

Why don’t more employees challenge non-compete in court?  The reason is simple – $$$$$.  Most employees don’t want to and can’t fund litigation to find out if there non-compete is enforceable.

Unfortunately what we have seen in Texas is that noncompetes have become the tool of choice for employers to attempt to restrict fair competition and suppress employee mobility. But Texas isn't alone in this regard and now corporate overreaching is starting to create a backlash among the public and state legislatures in many states.  California and North Dakota already ban noncompetes altogether. Reform efforts are currently underway to ban or restrict the abuse of noncompetes in several states, including Oregon, Colorado, and Massachusetts. (We recently wrote about the Massachusetts effort here.)

I, for one, support this trend and hope that all states move to ban the fundamentally un-American practice of requiring an employee to give up his or her right to work in the future in return for an at-will job. At the very least they should be scaled back to apply only to the highest level of employees or those employees who truly have access to secret recipes or true trade secrets (no your rolodex does not qualify).  Current they are (at least in Texas) out of control and damaging to both employees and to businesses’ ability to find quality employees in many fields.

Massachusetts Moves to Ban Employee Noncompetes

Following California, Massachusetts appears to be moving closer to banning noncompete "agreements" in the employment context. Dawn Mertineit and Erik Weibust report in the Trading Secrets blog:

As the New York Times reported on Sunday, many of those who testified at the hearing opined that employee non-competes stifle competition.  For example, several legislators spoke of constituents who they deemed “trapped” in jobs because of non-competes signed years earlier, and insinuated that many employees are “ambushed” with non-compete agreements after they have quit their former jobs and rejected other offers.  The Boston Globe and the Boston Herald have each recently published articles about the purported perils of employee non-compete agreements, both of which (as well as the New York Times article) referenced a summer camp in Wellesley, Massachusetts that makes its camp counsellors sign them.

I hope this trend continues and all states move to ban the fundamentally un-American practice of requiring an employee to give up his or her right to work in the future in return for an at-will job. At the very least they should be scaled back to apply only to the highest level of employees or those employees who truly have access to secret recipes or true trade secrets (no your rolodex does not qualify).  Current they are (at least in Texas) out of control and damaging to both employees and to businesses' ability to find quality employees in many fields.