Genaro Pedroarias watched as his employer cut hundreds of jobs last winter. He hung on through another painful round of layoffs in February, comforted by the fact that his departing colleagues at least enjoyed a few weeks of severance pay and other benefits.
But when the time came for Pedroarias and 800 others to leave in May, there was no sweetener on the way out the door. Teligent Inc., a once highflying telecommunications firm that has filed for Chapter 11 bankruptcy protection, decided to set aside funds to give retention bonuses to the employees who remain.
The decision by the Vienna company is playing out across the country as more technology shops declare bankruptcy and try to reorganize their operations with limited pools of cash for workers. The American Bankruptcy Institute reports that the number of bankruptcies in the first quarter of this year rose 17.5 percent compared with the same period in 2000.
Yet rewarding one group of workers at the expense of another makes little sense to people like Pedroarias, who moved from California 3 1/2 years ago to take a job making computer-generated maps for Teligent.
"The people who were loyal and stayed were the ones who got the worst deal," Pedroarias says. He says he has about $1,600 in unpaid expense-account bills accruing interest on his credit card.
Teligent declined to comment on his case.
Employment lawyers say there is no entitlement to severance pay or earned vacation time unless companies promise to offer it in employee handbooks or job contracts. But companies generally must make good on back pay and expenses.
Teligent, for its part, continues to operate in major U.S. cities, such as Washington, New York, Los Angeles and Houston, while a bankruptcy court decides how to ration the company's cash as it reorganizes. Sources close to the company suggest Teligent will prepare a petition asking the court to award some severance to workers dismissed in that last round of job cuts. The court apparently has set aside $900,000 for severance and other claims. But some of the affected workers fear the money won't come close to what's fair.
Employees owed salary or travel expenses typically can recover at least the first $4,600 they are due before other creditors under bankruptcy law.
Tita Thompson, a Teligent spokeswoman, would not specifically address the situation but said: "It's a very sensitive topic. It's never easy to let employees go. It was probably the most difficult day at the company."