Saturday, September 27, 2003
Copyright © Las Vegas Review-Journal

TEAM AMERICA: Workers not getting paid

1,000 in valley could be affected after national payroll provider has assets frozen

Financial troubles at a major U.S. payroll and human resources provider could leave as many as 1,000 Las Vegas-area workers unpaid this weekend while their employers are left wondering what went wrong.

Team America, a professional employer organization based in Worthington, Ohio, provides payroll administration and human resources management services to approximately 180 Southern Nevada businesses.

Recent problems at the corporate level are now affecting valley workers who were to have been paid Friday, a source within the company said.

"We have about 1,000 people who get our paychecks in the valley who are being stiffed," the source said. "(Team America's) assets were frozen by the bank. They were supposed to make payroll today (Friday) and did not."

Representatives of several local businesses that pay their workers through Team America confirmed Friday they experienced problems. It's likely up to 50,000 U.S. workers paid through the company could be similarly affected, the source said.

David Gagliano, owner of Las Vegas-based Diamond Painting, spent the afternoon trying to reach someone from Team America by phone. On Friday, his eight employees told him their banks had either refused to honor their paychecks or failed to credit their electronic payroll transfer.

"I need to get some answers to this," Gagliano said. "If my workers are unpaid, myself included, the first thing I'll have to do is pay them out of my own pocket.

"Now I have no health insurance because they handled it; they were responsible for all my W-2 forms. ... This is a nightmare. It's an Enronlike fiasco."

Ron Fox, owner of Las Vegas-based Fox Design, said he has used Team America's payroll services for about four years. On Friday, the company contacted him to say it would not make its regularly scheduled electronic deposits to Fox's employees and instead asked him to pay his six employees directly.

"They told me they'd be in touch on Monday to rectify the problem," said Fox. He said is concerned about the situation even though he's not at risk of losing money should Team America shut down because he typically repays the company after it has paid his workers.

Because Team America did not collect funds from Fox in advance, he said, this week he'll pay his workers out of pocket. Still, he's concerned over what may be taking place at his payroll company.

"They haven't ripped us off in any way, but things like this make you wonder if funds set aside (from employees' paychecks) for federal taxes or insurance are actually being used for those purposes," Fox said. "I'd hate to think a business would keep that money and use it to fund their operations."

Fox said he has seen no evidence of such conduct at Team America.

Employees at the Crest Budget Motel at 207 N. Sixth St. also said they were contacted Friday by Team America workers and told their "checks were no good."

Both Gagliano and Fox said payroll delays are common with Team America, but the unnamed Team America worker said it's unlikely funds previously collected by the company would be returned. The source added many Team America employees took part in a conference call Friday that painted a bleak picture of their employer's future.

"The likelihood that they're able to work things out, according to the conference call this morning, is remote," the source said. "They're throwing, what was told to us on the conference call, `Hail Mary passes' to try to get something put together to save the company."

Efforts on Friday to reach Team America's corporate office were unsuccessful. Workers at its Las Vegas office at 1919 S. Jones Boulevard referred questions to the company's Ohio headquarters.

In recent weeks, Team America has been hit with several financial challenges that culminated this week when the Nasdaq stock market halted trading of its stock at 52 cents on Thursday. On Friday, La Jolla, Calif.-based Vsource announced it was backing out of a previously announced merger, citing "breaches of representation, warranties, covenants and agreements" by Team America.

The Las Vegas source also said Cash Nickerson, Team America's chairman and chief executive officer, resigned earlier this week. Efforts to confirm that report were unsuccessful.

Team America's annual revenue fell from $451 million in 2001 to $58.9 million last year. Since 2000, it has reported combined annual losses of $15.5 million, followed by losses of more than $4.2 million during the first six months of this year.