Etown Pulls the Plug; Workers Locked Out

Consumer electronics site Etown has become the latest victim of the dot-com bust, dismissing its entire workforce of approximately 100 people in New York and San Francisco. The company had run out of money, according to chief executive Robert Heiblim. Etown, operated by Collaborative Media, Inc., has transferred its remaining assets to electronics retailer Best Buy, Inc. of Minneapolis, a major investor. The site was still active as of Sunday, February 18; whether Best Buy will simply shut it down or use it as a sales organ isn't known at present.

Etown's customer service employees found themselves locked out of the building when they reported for work in San Francisco's Mission District on the morning of Wednesday, February 14. Workers in the New York office were told to clean out their desks immediately and be gone by the end of the day, according to one widely circulated email from a former Etowner. In November, Etown's San Francisco employees had voted to form a union and were rewarded by having 13 of their comrades laid off a few days later. (The new economy mirrors the old: A similar move by customer service workers at was followed by the liquidation of the entire department.)

The February shuttering of the business was not related to the organizing drive, according to Etown executives, a statement that was echoed by Erin Poh, a representative of the Northern California Media Workers Guild, who had been working with the site's employees. Etown had simply exhausted its finances, Heiblim told reporters. Workers were told they would not be paid for their last two and a half weeks, an announcement that provoked outrage among them. "Living in San Francisco, having three weeks of work just written off is not plausible, especially for people at my level," said former service representative Eric Anderson. "Scrimping and saving is already hard enough." Etown workers will attempt to win their back pay by filing a complaint with the National Labor Relations Board, Anderson told the San Francisco Chronicle. The city's cost of living is one of the highest in the United States.

On the day the office was padlocked, Heiblim tried to put a positive spin on the situation, saying he was still pursuing additional funding for the company. "We're not going to give up trying to find financing," he stated. "But we have to let people go because we can't pay them. If I find someone to give me funds next week, I'll see if I can get people to come back to work."

Etown's troubles may be deeper than Heiblim acknowledged. According to an in-depth analysis of the collapsing e-commerce phenomenon by Wall Street Journal reporter Stephanie Miles ("Dot-Coms May Need Crash Course In Labor Law Amid Broad Layoffs," January 30), companies like Collaborative Media who engage in abrupt wholesale dismissal of workers may be in violation of the federal Worker Adjustment and Retraining Notification Act (WARN).

WARN is intended to provide a degree of economic protection for workers affected by closings (at companies with 100 or more employees) by giving them at least 60 days notice and access to outplacement services at the employer's expense. Employers may also comply with WARN by giving dismissed workers 60 days' pay.

Most Internet startups are not even aware of WARN, Miles mentions, nor do they realize that its provisions apply to "JAVA coders as well as to steelworkers." One Connecticut Internet business, Walker Digital, Inc., has already been sued by that state's attorney general for failing to comply with the law. Labor attorney Donald Savelson told Miles that concern about WARN among Web-based businesses is "becoming more common as more companies are going in the tank."

Etown featured a number of high-profile writers in the specialty audio and home theater arenas, who wrote voluble reviews (at New Yorker word rates) of products offered for sale on the site. Mixing ostensibly objective opinion with blatant sales pitches—a practice known as "advertorial" in print journalistic circles—brought Etown's contributors plenty of criticism from other writers, but never seemed to bother the thousands of consumers who visited the site. How quickly Etown's now unemployed scribes will find work or regain their credibility among their peers is anyone's guess.