This is not necessarily true. I am a startup employee and I have NSOs.
In this case it seemed to be the case where one of the founders didn't know the difference when setting things up initially. After series A one of the investors pointed it out and new employees were given ISOs and old employees savvy enough to care were paid off.
edit: just to make sure I'm not crazy I dug out my option agreement and it's definitely NSO.
Condolences. That really sucks. :(