Business ethics 101

Pub date May 9, 2006
WriterG.W. Schulz


Marcoa Publishing seems to be at the top of its game. The San Diegobased company bills itself as the "nation’s largest publisher of advertising-supported, local business publications."

It rarely misses an opportunity to remind prospective advertising clients and employees alike about its exclusive contract to print industry-specific guides and an annual membership directory for the San Francisco Chamber of Commerce, of which it is also a member and business partner.

In fact, Marcoa’s San Francisco offices are located just four floors below the Chamber in the heart of the Financial District, at 235 Montgomery St. But what the oldest Chamber of Commerce in the western United States may not have known is that its "exclusive publisher" is being investigated by the California Department of Industrial Relations (DIR) for possible violations of the state’s labor code.

And now the question is: Does the business community’s biggest booster have a blind spot for dubious ethics?

Paula Ceder went to work as an ad sales specialist for Marcoa’s SF office from her home in November 2004. But despite the fact that she quickly became the San Francisco office’s top seller, she realized that Marcoa had no interest in reimbursing her for business expenses. High-end salespeople regularly spend thousands of dollars a year making personal contact with their clients money that employers generally reimburse.

It’s perfectly common, and in fact legally required, for employers to reimburse workers for such expenses. And Marcoa has even promoted the claim that it offers expense reimbursements in its job postings on

But by the time Ceder left Marcoa, in August 2005 having worked much longer than many former Marcoa employees she told the Guardian she had accrued $2,500 in reimbursable business expenses. Over that nine-month period, she didn’t meet another employee who’d received reimbursed expenses, meaning former Marcoa employees could still be awaiting thousands of dollars in compensation. Marcoa did, however, claim to offer a taxable $10 "parking bonus" for each ad contract that the sales specialists managed to sell. But even then it took her four months to get the "bonus," Ceder said. Some ad buyers can commit as much as $12,000 to a two-page spread.

"As soon as I went to work for Marcoa, it became clear that there was no program for expense reimbursement, and I was aware that that was against the law," Ceder said recently. "That was entirely different than any experience I had ever had. Had I known I was going to have that experience, I would have never gone to work for them."

Section 2802 of the state’s labor code reads: "An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer."

Believing she’d never see the money, she approached the California Labor Commission, which ruled in her favor and granted her $1,693 of the expenses in January. At the hearing, Marcoa CEO Stewart Robertson told the administrative judge he would produce the company’s policy regarding expenses. He never did.

During her tenure, Ceder had managed to squeeze a substantial raise out of Marcoa, due mostly, she said, to her top performance. But she said others weren’t so lucky.

Ceder said she concluded that the company not only failed to maintain any sort of policy regarding expenses but also seemed to systematically shortchange workers, from declining to pay simple business expenses to withholding commission payments for months on end or never making the payments at all. Salespeople often earn a percentage of each ad contract in the form of commission as an incentive to sell, which Marcoa portrayed as a significant part of its compensation package.

"My entire point for pursuing a claim for myself was not to receive my expense reimbursement back, although it’s always nice to get the money you put out," Ceder said. "My aim was twofold: One, to have the state investigate and prosecute Marcoa, so that the result of that investigation and prosecution would be an across-the-board change in Marcoa’s current noncompetitive business practices. And second, to get the Marcoa story out into the public."

Former Marcoa workers we interviewed appeared to corroborate Ceder’s claims.

Mario Sarafraz worked as a salesman at Marcoa for 13 months, but he’s worked elsewhere in sales for 17 years. He said he only "tolerated" Marcoa for so long because he liked working closely with the hotel and restaurant industries for the company’s semiannual Business Meetings and More publication.

"Everything else was a nightmare from the beginning," he said. Sarafraz claimed he never received a single commission check, and added that even in a profession where workers move on quickly, Marcoa "had an extremely high turnover rate."

Virtually everyone we talked to said the sales staff had to share two old computers and the company didn’t allow them access to the database of businesses that had purchased ads. Repeated phone calls to businesses that had already grown disenchanted with Marcoa were common, they complained.

A former office manager who asked not to be identified said she believed the Chamber was largely kept in the dark about annoyed advertisers waiting for sometimes long-delayed publication dates and embittered former Marcoa employees.

Carol Piasente, the Chamber’s vice president of communications, said the group had no comment and that the issue was a "personnel matter between Marcoa and their employees." Steve Falk, the Chamber’s CEO and a former publisher of the San Francisco Chronicle, wrote in an e-mail that he "had not heard any complaints about Marcoa" but failed to respond to follow-up questions. No one at the Chamber would confirm whether the group received annual fees from Marcoa for revenue generated from ads placed in Chamber publications.

"It was by far the most shady company I’ve ever worked for," one saleswoman, who also requested anonymity, said. "They turn and burn employees like you would not believe."

Although she too became a top seller for the company, she said she never received commission and never saw her last paycheck.

Dean Fryer, a spokesperson for the DIR’s Division of Labor Standards Enforcement, told us that agency officials pursue an investigation based on the case’s merit.

"On all cases that involve wages due employees, we’ll move forward to collect those wages," he said. "Our primary goal is to collect money due employees."

In Marcoa’s San Francisco office of 10 or so employees, sales can reach anywhere between $1 million and $3 million annually. The company also publishes industry, relocation, and real estate guides in at least four other major cities, including San Jose, Dallas, Austin, and Houston. Elsewhere, Marcoa publishes local resource guides for new trainees at 80 of the nation’s military installations, according to the company’s Web site.

Marcoa’s San Francisco publisher Bart Lally and CEO Robertson declined to respond to a series of detailed e-mail questions.

"Marcoa absolutely believes that it is in compliance with all relevant labor laws," Robertson wrote in an e-mail. "However, we are not going to provide specific responses to any of your questions."

Sarafraz insisted it’s not his nature to complain.

"As far as training and having a working system, I’ve never heard of an organization so out of place," he said. "Every organization has shortcomings. But these people just didn’t care." SFBG