Dot-com workers tell layoff horror stories

By Margie Mason Associated Press Writer
Monday March 05, 2001

SAN FRANCISCO – Dawn Balzarano interviewed for months before leaving her job as a Red Cross youth program coordinator to join a dot-com. She gave two weeks’ notice, left for a week at the beach, and called home to find an urgent message from her new company, Alphadog. 

“They said, ’We had a layoff, and we no longer have a position for you,”’ Balzarano said. She is still searching for another job four months later. 

With nearly 12,000 people laid off nationwide from dot-coms last month, tales of termination are getting ugly. Some employees have found locked doors and notes telling them to go home; others got the bad news by e-mail or a tap on the shoulder. Some haven’t been paid for weeks of work. 

Experts say these former dot-com workers have little recourse. 

“Employees have two options: file a lawsuit in court for wages or file a complaint with the state labor commissioner,” said Dean Fryer, spokesman for the state Department of Industrial Relations. 

But if those companies have run out of funds, employees must get in line behind banks and creditors in bankruptcy court. That process can be long and fruitless. 

“I get a lot of calls,” said Kevin Mendez of Highman, Highman & Ball, a San Francisco law firm that emphasizes employment law. “They have very few remedies, really.” 

Mendez said most employees sign a contract allowing their employer to terminate their positions at will. That eliminates breach of contract lawsuits that once choked the legal system. And if wages or other money is owed upon termination, it’s difficult to retrieve from a financially ailing company. 

Unionized employees have some protection through collective bargaining agreements, but unions haven’t been the trend in the dot-com world. In November, customer service employees at etown.com became the first dot-com workers to file for union status with the National Labor Relations Board. 

But the online electronics review site folded earlier this month before employees got a chance to vote on establishing a union. 

“The locks were changed on the building and one of the guys had all his personal belongings impounded in the building. There’s no notice of when and how or if they will be paid,” said Erin Tyson Poh, representative for the Northern California Media Workers Local 39521. “We know this stuff is happening, and we know that in those instances — that when there’s a shut down — the employees fare better with a union.” 

Although many start-ups could handle layoffs better, they shouldn’t be blamed for failing, said John Challenger, of Challenger, Gray & Christmas, a Chicago consulting firm that tracks dot-com layoffs. The firm reports nearly 66,000 dot-com layoffs since December 1999. 

“The dot-coms are not able to offer the kinds of programs or safety nets that people have come to expect from companies in the ’90s ... like severance, extended health insurance and outplacement,” he said. “I’m a little more forgiving of the dot-coms because start-up companies are ... struggling for their survival.” 

Still, Challenger has written a guide on how to handle employee dismissals, which includes doing it face-to-face, keeping it brief, having a written explanation of why the layoffs are occurring and a list of services and programs the company is offering. 

David Drach wishes his bosses had followed some of those pointers. 

Instead, he opened a company e-mail at 9 a.m. telling him and his co-workers to report to various conference rooms. He knew the end was near as he watched a handful of spared workers scoot out the door just before the announcement. 

“They walked by and tapped people on the shoulders and told them to go home for today and come back tomorrow. They laid everybody else off,” he said. “They may as well have gotten people together in the circle and started playing duck-duck-goose.” 

Drach, 33, of San Jose worked as a network administrator for DoDots, a digital infrastructure dot-com, until he was laid off last November. It was the third job he’d bounced to in four years — and the last. 

It took him just eight days to get a similar position at Santa Clara-based Solid Data Systems, a provider of file-caching appliances for the e-business market. Still, he remains bitter about the DoDots experience. 

“The last one hurt more than the other ones,” Drach said. “Even after I got laid off, two of my friends stayed back to help the moving company. I got to go back to the scene of the crime after the fact. You can just see the shock still in their eyes.”