Many former Gibraltar Savings employees who were laid off last week after Security Pacific Corp. agreed on June 27 to buy the failed thrift said they were angry about the way the layoffs were handled and were considering legal action against Security Pacific or the Resolution Trust Corp., the federal agency that seized Gibraltar in March, 1989.
The former employees said they worked long hours of overtime at Gibraltar's Simi Valley headquarters without knowing they were to be laid off. When the layoffs began early last week, terminated employees were given no notice. On Monday, many still had not received their final checks.
Of the 800 people who were employed at the Simi Valley office--out of 1,500 Gibraltar employees statewide--about 180 were laid off last week, Security Pacific said.
Marlene Elliott, Gibraltar's former payroll manager, said that Security Pacific mismanaged the layoffs and that she received conflicting and unclear instructions about how to handle last week's final payroll.
After working 35 hours the weekend after the acquisition and through most of the night the following Monday, Elliott said, information regarding who was to be laid off and the terms being offered was so garbled that there was no way her department could meet the regular Tuesday afternoon deadline for completing the payroll.
"We ran three separate payrolls, none of which were accurate or efficient," she said.
On Tuesday, all seven payroll employees, including Elliott, were offered 120-day contracts, although they would lose many benefits such as vacation, sick leave and life insurance. Elliott and other former workers complained that the contracts were also vaguely worded, allowing Security Pacific to fire them "for cause," which would also mean they would forfeit any severance pay.
Elliott said the payroll group refused to sign unless they were given their severance pay up front. When Security Pacific refused on Thursday, the workers were told to clean out their desks and were escorted out of the building by security guards, she said.
Some former employees said they were considering a class-action lawsuit challenging the RTC's position that the workers are not covered under the federal plant-closing law. The law requires employers of 100 or more workers to notify employees in writing 60 days before mass layoffs.
The law "was not intended to apply to the federal government when closing an insolvent thrift," said RTC spokesman Kevin Shields. He said there have so far been no legal challenges to this interpretation of the law.
"Obviously, some of these displaced employees are going to be disgruntled," said Security Pacific spokeswoman Deborah Lewis. But, she said, "We've had a very limited amount of time to go in and evaluate who they are and what they do. We've done this as fairly as we possibly could."
If the severance payments had been handled by the RTC, she added, it would have taken up to eight weeks for former employees to receive their checks.
Gibraltar, once the nation's 10th-largest thrift, is the largest institution sold by the government since passage last year of legislation to clean up the troubled savings and loan industry.
Gibraltar lost $750 million in the last three years on investments in high-risk securities, resorts and even "horse condos." Terms of the sale were not disclosed, but industry sources estimated Security Pacific paid about $140 million to buy Gibraltar.
Susan Hearon, a former Gibraltar data processing specialist, said she felt particularly bitter about her abrupt termination because for months employees had been encouraged by the RTC to stay. "For 15 months we've been doing a pretty good job of keeping this place going and the government has been twiddling its thumbs. This is what we get for it," she said.