The story of Kelly Rieves, a former employee of Buc-ee's being sued by the company for pay they say she owes them back, highlights a number of interesting questions about retention pay.
Rieves received hourly pay as an assistant manager as well as monthly incentive pay (equal to about one-third of her total compensation). According to the Houston Chronicle, Rieves' contract stipulated she would have to pay back the incentive pay if she left her position before the end of her contract or failed to give six months' notice.
Common practice
Retention pay is a common practice in both short- and long-term incentive plans. As noted in this survey from Vivient Consulting and World at Work, the majority of private companies offer incentive plans, and a common goal of many of the components is retention. The concepts behind these plans are usually to address one or more of the following:
- Keeping a highly skilled or high-demand employee
- Protecting a significant investment in the education or training of an employee
- Creating employee buy-in to the short- and long-term goals of the company by tying the incentive pay to current and future milestones, stock prices, etc.
Such practices are more common in private and publicly traded companies than in union or government environments. They are normally set up as pay in addition to base salary, and they serve as an incentive to stay, usually based on the achievement of individual or organization success.
A different type of incentive is to offer a one-time stay bonus, if an organization wants to simply keep employees for additional time. This is a lump sum of money paid when and if the person remains for the full term. They are simple and easy to use, and thus are found in companies from small start-ups to the U.S. military. However, unlike Rieves, they are not paid usually paid every month.
Implications
What would a reasonable person think of Rieves' situation? On the surface, it seems like the big guy going after the little guy. But if keeping employees is that difficult, then isn't it reasonable for employers to do what they can to keep staff?
Conversely, is it fair that incentive programs like this one are normally only offered to management and executives? Isn't it a good thing that hourly staff are now being recognized for the importance of their contributions?
This is a new and rare situation, which means it will be tested and vetted in the courts. It is likely not a perfect solution nor will the subsequent attempts by other employers be perfect, but the process has to start somewhere.
Hourly employees in convenient stores and restaurants are in tough, low-wage jobs. Though progress is being made, governments have been slow to increase the hourly minimum wages. Is it possible that this path will lead to more fair wages that better reflect employee contributions?
Check in next week when we look at this topic in more depth from both the employee and employer perspectives.
