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Sofar Sounds agrees $460,000 settlement with New York authorities over its use of volunteer staff

By | Published on Wednesday 8 January 2020

Sofar Sounds

Sofar Sounds has reached a $460,000 settlement with the New York State Department Of Labor over its past use of unpaid volunteers at its shows in the American state. The deal follows the increase in scrutiny of the Sofar Sounds business model that occurred last year.

Originally launched in London just over a decade ago, Sofar Sounds now has active operations in multiple cities around the world, further expanding its reach through a network of volunteer ‘ambassadors’ who run events in other locations. Most shows are intimate and staged in non-traditional venues, and are sold based on the experience more than who plays. Sometimes tickets are sold, other times entrance is free and donations are taken on the night.

Like many grassroots music events, Sofar Sounds has traditionally relied on volunteers and artists working on a profit-share basis at many of its shows. But that approach has come in for some criticism in recent years as the Sofar Sounds company has raised millions in investment from some pretty corporate sounding outfits.

The spotlight was further put on the Sofar Sounds business model last August in an article by New York-based musician and writer John Colpitts published on the Talkhouse website. That article reviewed the Sofar Sounds company’s wide-ranging use of volunteers to organise and manage its shows, and asked whether that practice was in line with employment laws in New York state.

At the time a rep for Sofar Sounds told Colpitts: “Sofar started out not as a business, but as a passion project that spread organically and grew into a global community. Because of how Sofar has grown, Sofar takes the interests of each community member seriously. We also take [employment] laws seriously. Based on discussions with legal advisors, we are comfortable we’re doing the right thing in compliance with local regulations and serving the interests of our community members”.

Nevertheless, prompted by Colpitt’s queries, the New York State Department Of Labor investigated the company’s practices and yesterday announced that a settlement had been reached which will see Sofar Sounds hand over $460,000. That money will be shared between the volunteers who have worked on its shows in the past.

As scrutiny of the Sofar Sounds business model increased last year, the company’s CEO Jim Lucchese – who joined last February – has talked about evolving both the way it pays artists and the way it staffs its shows, introducing paid team members alongside the volunteers. He’s also sought to offer more clarity on how the average Sofar Sounds show works financially.

The New York Department Of Labor acknowledged those changes in its statement yesterday. It said that when it “opened its investigation, Sofar cooperated fully and immediately changed its business model. Sofar now staffs all its events with paid employees. The company also agreed to immediately compensate ambassadors who provided any unpaid work”.

The state’s Labor Commissioner, Roberta Reardon, added: “Worker protection is at the forefront of our mission at the Department Of Labor and that includes making sure New Yorkers receive the wages they are entitled to. In this case, Sofar made our job much easier because they wanted to be a partner and a good corporate citizen”.

“When a for-profit business enlists the services of an individual, that individual is an employee, and must be paid for the work they are doing,” she added. “My department closely monitors compliance with New York state labor law and we recognise that sometimes businesses make mistakes”.

“In this case”, she went on, “Sofar Sounds fully cooperated with the investigation and corrected that mistake. They have taken swift steps to change their business practices, and they are fully compensating their employees. I consider this a win for everybody”.

Lucchese’s past comments on evolving the Sofar Sounds business model have generally implied that the changes would occur across the board, although given that the company operates a number of different models in different cities it’s not clear if precisely the same changes will be made everywhere. Nor whether the deal with Reardon’s department means more extensive changes will be made for shows in New York State.

Responding to the Labor Department’s announcement, a spokesperson for Sofar Sounds told Variety: “Today’s agreement with the New York State Department Of Labor stipulates no admission of guilt or wrongdoing and confirms our operating model is fully compliant with New York state law. We thank them for working collaboratively with us in New York, Sofar’s biggest US market. We are excited about resolving these issues and moving forward in 2020, with a continued focus on connecting local and independent musicians with passionate music fans”.