Crime & Courts

Ex-CFO sues WaterWalk owner Jack DeBoer in $779,000 wage dispute

WaterWalk Hotel Apartments opened its first property at 411 W. Maple in September 2014.
WaterWalk Hotel Apartments opened its first property at 411 W. Maple in September 2014. Wichita

WaterWalk’s former chief financial officer says in a new lawsuit that the company and its owner, Wichitan Jack DeBoer, refused to pay nearly $800,000 in wages and bonuses promised by her employment contract — then fired her when she complained.

Kay Auer, in a Dec. 17 court filing that seeks unpaid compensation plus penalties and interest, says DeBoer terminated her on Oct. 9 in retaliation for a wage claim she made under the Kansas Wage Payment Act, the state law that says when and how employees have to be paid. At the time she was terminated, Auer had worked for DeBoer and his company, WaterWalk International — formerly WaterWalk Apartments — and another company he owns, Consolidated Holdings, for four years. Auer was Consolidated Holdings’ senior vice president of finance, according to a cached version of Auer’s business profile that appeared on the WaterWalk Hotel Apartments website.

Auer’s lawsuit says that the employment contract she and DeBoer signed when she was hired in October 2014 promised her a $200,000 annual salary; $25,000 salary increases in January of 2016 and 2017; plus a bonus equal to her salary every January 15.

But, she says, DeBoer, WaterWalk and Consolidated Holdings didn’t give her the January 15 payments in 2016, 2017 and 2018 — resulting in a loss of $671,710.

Auer’s suit says she’s also owed a total of $100,000 in bonuses for two out-of-state development projects as well as $8,266 for 155.95 hours of vacation time she didn’t use.

Harvey Sorensen, a partner at the Wichita law firm representing DeBoer and his companies, Foulston Siefkin, in an emailed response to The Eagle’s request for comment called the matter “an unresolved disagreement.”

“Neither the defendants nor this firm have any comment on this pending litigation,” he wrote.

Auer’s attorney did not respond to messages seeking comment. In addition to the unpaid wages, interest and penalties associated with the alleged contractual breach and wage law violations, Auer is demanding more than $75,000 for “pain, suffering and emotional anguish” connected to her termination.

DeBoer is well-known in the real estate and hospitality worlds. He pioneered the all-suite hotel and extended-stay concepts, using them to found the first all-suite hotel in Wichita in 1975 and, later, Candlewood Suites and Value Place — now WoodSpring Suites. He’s also responsible for downtown Wichita’s WaterWalk mixed-use development, which was once home to Gander Mountain.

Frank Russold gives a tour of his condo at WaterWalk Place, which doubled in size a few years ago when he purchased an adjacent unit. It's a hip spot with unparalleled views of downtown fireworks. (Matt Riedl/The Wichita Eagle)

WaterWalk International, launched in 2014, is DeBoer’s upper-end extended stay hotel with apartments concept. There’s a 133-unit one at 411 W. Maple in Wichita. He has others in various stages of development, The Eagle reported in November.

Auer first met DeBoer while she was working for accounting firm Ernst and Young, handling two of his hotel brands in the late ‘80s and early ‘90s, according to Auer’s cached business profile. She worked as the chief financial officer of DeBoer’s Value Place brand from 2007 to 2012 before leaving to join a Colwich-based facilities management firm.

DeBoer rehired her in October 2014 to help build his WaterWalk brand, the profile says.

According to Auer’s lawsuit:

DeBoer, WaterWalk International and Consolidated Holdings hired Auer in October 2014 and both Auer and DeBoer signed an employment contract that discussed her salary and the annual bonuses due each year on January 15. Auer “provided satisfactory services” to DeBoer and the companies and received payments for her work as promised from Oct. 1, 2014, to Jan. 1, 2016.

A year after she joined the companies, Auer and DeBoer agreed to modify Auer’s employment contract with a written “side letter agreement” that increased her pay and converted her annual bonus to a “nondiscretionary payment of compensation for her continued service.” This was done to “offset her income tax obligations.” The side letter agreement was backdated to Auer’s hire date.

Under her amended employment contract, Auer was to receive a total of $445,910 for 2015; $501,680 for 2016; and $557,390 for 2017.

But DeBoer and his companies failed to pay her $198,950 for 2015, the payment of which was due Jan. 15, 2016; $226,820 for 2016, due on Jan. 15, 2017; and $245,940 for 2017, due on Jan. 15, 2018.

Auer says she “continued to provide satisfactory services” even though she didn’t receive the pay she was promised.

On April 26, 2017, DeBoer emailed Auer asking for a “breakdown” of her compensation with WaterWalk International. She responded the next day, telling him that half of her total yearly salary was to be paid as a bonus on January 15 of each year and that the bonus was supposed to be paid “without regard to achieving certain criteria” per the backdated side letter agreement.

On April 30, 2017, DeBoer emailed Auer again, asking her “to ‘refresh’ him on her salary and bonus arrangements.” Auer responded with a copy of the 2015 side letter agreement and a spreadsheet showing the money she was due and told DeBoer that “she had been required to pay income taxes on this earned but unpaid compensation.”

Later that year, DeBoer told Auer that he wouldn’t pay her “until he recovered loans he made to fund operations and development” and cut her salary to $100,000 a year. He also told her she would earn a $50,000 bonus for each development project. Bonuses would be paid after a project contract was signed and construction was underway.

Auer earned $150,000 in bonuses in 2018 for three development projects — two in North Carolina and one in Minnesota. She received payment for one and was awaiting construction to begin on the other two projects to receive those payments.

On Sept. 29, 2018, Auer emailed DeBoer to say that she hadn’t been paid everything she’d earned under her employment contract and told him that “she was entitled to her wages, statutory penalties, and interest” under the Kansas Wage Payment Act.

Ten days later, on Oct.9, DeBoer and the companies terminated Auer, effective immediately.

Related stories from Wichita Eagle

Amy Renee Leiker has been reporting for The Wichita Eagle since 2010. She covers crime, courts and breaking news and updates the newspaper’s online databases. You can reach her at 316-268-6644. She’s an avid reader and mom of three in her non-work time.