Posted on: June 22, 2016

By MELINDA LIGOS | Published: April 12, 2000 | The New York Times

The dot-com workplace is a magnet for young Americans, with its promise of adventure, riches and a casual work environment.

Now, though, the environment may be getting too casual. Managers at some Internet companies are rethinking their corporate cultures as a smattering of sexual harassment lawsuits begins to roll into their high-technology world. Some legal experts think these cases might be the beginning of a wave.

“The Internet startup community is going to be a major target for sexual harassment litigation,” said Gregory I. Rasin, a senior partner at the Manhattan office of Jackson Lewis Schnitzler & Krupman, an employment law firm that has several dot-com clients.

By nature, these companies are at legal risk because the entrepreneurs who start them are often eager to create the ultimate anticorporate environment, says Corey Sprague, director of human resources at the RiskMetrics Group, an Internet start-up on Wall Street. “I get a lot of calls from people who are setting up dot-com companies and want to create a no-holds-barred, wild culture, free of rules and policies,” said Ms. Sprague, whose company is one of the few startups that hired human-resources personnel from the beginning. As a result, she says, most are not eager to create policies and training programs that address traditional human resources concerns.

Even managers who are sensitive to issues like sexual harassment are so focused on raising capital and expanding their businesses that they neglect to create a human resources department to address them, says John Iorillo, co-founder of the Ambrose Employer Group, a provider of human resources services in New York that has more than 120 dot-com clients. “For the first few years, most startups are just in survival mode,” he said.

That was the case at Pseudo Programs, a Manhattan-based Internet TV network that was sued in January by a former employee who says the company had a hostile work environment for women. In her complaint, the employee, Kelly Alfieri, said male employees at Pseudo frequently referred to female employees as “bimbos” and forced them to look at sexually explicit material on the Internet.

Pseudo’s male employees “were allowed to do whatever they wanted,” said David Jaroslawicz, Ms. Alfieri’s lawyer. “It was like they were living in the Wild West, and the sheriff was out of town.”

Jeanne Meyer, senior vice president for marketing at Pseudo, said Ms. Alfieri’s accusations were “completely without merit.” The company acknowledges that it created a human resources department only after Ms. Alfieri quit Pseudo two years ago. “As with most startups, our senior management did everything in the beginning, from putting toilet paper in the bathrooms to payroll,” Ms. Meyer said. But now, she said, its new department “continually reinforces the company’s sexual-harassment policies.”

Compounding the lack of formal policies and training at many startups is a culture of long hours and close quarters. “People are working 80 or 100 hours per week, so the only social contact they’re having is in the context of the workplace,” said Daniel Weisberg, an employment-law specialist at Brobeck, Phleger & Harrison, a Manhattan-based law firm. As a result, he says, inner-office dating is rampant, and relationships that go sour have the potential to turn into sexual harassment complaints.

In one highly publicized example, Juno Online Services, an internet company based in Midtown Manhattan, was sued last fall by two former female employees who said they had been told they would lose their jobs if they broke off their relationships with senior executives they were dating. Juno’s lawyer, Terri Ross, says the company denies the accusations in both lawsuits. One lawsuit has since been referred to arbitration by a New York state court, and Juno has applied to send the second complaint to arbitration.

Another common theme in cases he handles, Mr. Weisberg said, is that “the one who was spurned gets terminated or doesn’t get the promotion they thought they should get and decides to sue.”

Because Internet start-ups are often small, with many staff members working in the same space, other employees are often unwitting witnesses to office liaisons, according to Garry G. Mathiason, a partner at Littler Mendelson, a San Francisco employment-law firm that represents more than 1,000 dot-coms throughout the country.

Mr. Mathiason offers the example of a company he represents where an employee recently complained that she had walked in on two co-workers having sex on the office floor. The woman was so offended, he says, that she immediately quit her job and is threatening to bring a claim against the company.

While such reports of sexual harassment seem fairly blatant, the majority of sexual harassment complaints at dot-coms are subtler, according to Mr. Weisberg. “The most common problem we hear about are employees who are offended by all the sexually explicit e-mail jokes that bounce around these offices,” he said.

Mr. Mathiason recently received a complaint from an employee who said she had received an e-mail, later traced to a co-worker, that read, “I see you’re wearing black today. You’re a very bad girl,” and directed her to an X-rated Web site. At another dot-com, Mr. Mathiason said, female employees complained that their male colleagues were continuously logging onto a Web site featuring co-eds taking showers.

“These kinds of activities seem to predominate in the dot-com world,” Mr. Mathiason said. “A lot of these guys haven’t been out of school for very long, and they’re still experimenting with this kind of juvenile stuff.”

Not all managers turn a blind eye to such antics, of course. Mr. Weisberg said his office had fielded several calls from dot-coms looking to provide sexual harassment training to managers. His office recently assisted two larger Manhattan-based Internet companies, DoubleClick Inc. and About.com, in setting up anti-discrimination training programs. “We’re definitely seeing more companies take a pro-active stance,” Mr. Weisberg said.

Another start-up, Boutique Y3K, recently appointed a human-resources manager to oversee its 12 employees. “We intend to take issues of harassment and discrimination seriously,” said Lisa Tisdale, the new manager.

Those that do not take such issues seriously are looking for trouble, Mr. Mathiason says. “Right now, you’re not seeing as much litigation as you might expect” in the dot-com world, he said. That is partly because the economy is so robust that would-be plaintiffs are “getting six job offers on the way to their lawyers’ offices,” Mr. Mathiason said.

But the minute the economy slows, he warned, disgruntled employees will have fewer opportunities to move on and will be more likely to go after their deep-pocketed former employers. “It will be like an earthquake hit,” he said.

Photo: Corey Sprague says many start-ops want a “wild culture, free of rules and policies.” (Marilynn K. Yee/The New York Times)