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What Goes Around . . .

Making promises to employees and then giving them the boot? They'll be back--carrying lawsuits that could damage your company.

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This story appears in the October 2001 issue of Entrepreneur. Subscribe »

What's piling up almost as fast as the number of newly defunct dotcoms? Lawsuits filed by former employees of those companies, people who were relying on inflated promises of big money. In Minneapolis, former employees of Wwwrrr Inc. sued the Web-based learning company after it shut down without warning-and without paying two weeks of wages or reimbursing employees for expenses. In the Silicon Valley, a top executive sued the company where she'd worked for conspiracy, claiming that she was purposely fired right before her stock options would have vested. Wherever the New Economy is slowing down, employees who got burned are filing suit over fraudulent inducement, breach of contract or violation of labor law.

"But You Said . . ."

Jeff Tanenbaum, an attorney with Littler Mendelson in San Francisco, calls the trend "disappointment lawsuits." With the labor market tight, owners of fast-growth small firms lured people away from stable jobs with promises of wealth. Within months, some of those companies went under, leaving the employees with a goose egg.

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