I've worked with many at various design and ad shops. However, they design for other media as well and aren't expected to know HTML/CSS. I've been handed "web" layouts in Quark before. It surprises me that the same would happen in dedicated web shops. Sound like bad hires to me.
Our graphic designer -- correction, art director -- does visual design and hands it off to production artists who turn it into HTML using Dreamweaver, or break it into Flash chunks. Want to know how big our art department is, including her? Three people.
Where I work too, there are designers who do mockups (in photoshop) who hand it off to developers to create them in HTML/CSS. They understand HTML enough although to not do bone headed designs that are really convulted to do. It saves me time from having to create it myself.
