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South by Southwest’s unpaid labor problem: Why it’s risking a class action lawsuit

Feb 26, 2014 / Media Coverage / salon.com — Charles Davis

Next month, more than 150,000 people will be in the city of Austin to attend South by Southwest, which started in 1987 as a tiny indie festival but has blossomed into a nine-day conference featuring the hottest names in music and film and politics and computers. There will be live performances and movie premieres alongside panel discussions addressing everything under the hot Texas sun. It’s Coachella mixed with TED talks and some Sundance; a sort of Burning Man for brands, corporate and personal, that is forecast to inject more than $200 million into the local economy.

SXSW will be hosting some of the hottest brands from entertainment to politics: Lena Dunham will be delivering an opening keynote address at the film festival; Fred Armisen and Carrie Brownstein of “Portlandia” will be talking comedy on a panel with “Saturday Night Live” alum and late-night host Seth Meyers. Celebrity astrophysicist Neil deGrasse Tyson will be there. Even WikiLeaks founder and fugitive Julian Assange will be making an appearance (via Skype) to discuss “the future of democracy.” And when this all happens? Every media person you follow on Twitter will be tweeting away about it to the point of unfollowing.

“What we’ve got is this incredible brand that sells excitement and novelty,” said Eric Glatt, one of the many speakers booked for SXSW 2014, when I spoke to him. “Here’s the place to discover the next big thing. If you are cool, you are going to be in Austin because that’s where all the cool people are going to be exchanging ideas on the next big technology start-up or the next app or the next band or whatever it might be.”

He doesn’t have a show on HBO or an international arrest warrant like some other presenters, but Eric is one of the more interesting invites.

He told me that his hosts at SXSW should probably be sued.

SXSW should have expected that. In 2011, Eric and others who worked as unpaid interns on the movie “Black Swan” sued film studio Fox Searchlight for back wages, an experience he’ll be talking about on the panel “Debating Internships: The Value of Unpaid Work.” That’s relevant because at SXSW, more than 3,000 people – some called “volunteers” and others called “interns” – work for nothing.

Like millions of other interns, Eric – who is in his 30s and now a law student and public interest fellow at Georgetown — had been conditioned to believe that working for free or close to it is simply what you do to break into a glamorous industry. The experience of seeing Natalie Portman on-set was supposed to be payment enough. And as he told me, “How could something this widespread not be legit, right?”

It probably isn’t. Last year, a federal court ruled that Fox owed Eric and other former interns some serious money. Though Fox has appealed the decision, more and more companies see the writing on the wall and have begun paying their formerly unpaid laborers the minimum wage. The people who run SXSW Inc. — the privately held, for-profit company that puts on SXSW – may want to follow suit, as you won’t find a lawyer willing to work for $7.25 an hour.

If they don’t? “They are most certainly opening themselves up to a lawsuit,” said Eric, whom SXSW isn’t paying for his appearance. “I hope to get the chance to say that while I’m there.”

As of 2010, SXSW Inc. had just 75 paid employees, including those working part-time. The company would not tell me how many it has now, but SXSW is upfront that in order to staff its events it relies on what it calls an “army of global volunteers.” These thousands of volunteers “are the faces of SXSW,” according to the company, and without them this year’s conference simply couldn’t happen.

That’s a problem. Were it a nonprofit, SXSW might have more leeway to use those volunteers; were it a hospital, maybe, not a festival with corporate sponsors. But SXSX is not a nonprofit. The people in charge aren’t paying themselves with experience, but with money.

“I can’t see how what they’re doing is legal,” said Ross Eisenbrey, vice president of the Economic Policy Institute in Washington, D.C., when I asked him about the use of unpaid labor at SXSW. He said the law was clear and it was clear to him that SXSW was simply not following it. “They’ve opened themselves up to a class-action lawsuit,” he said, “which involves attorney fees and could involve liquidated damages, meaning double back pay for everyone.”

When it comes in the form of an “internship,” unpaid labor is typically defended on the grounds that it’s a way for young, inexperienced people to learn valuable skills and make the even more valuable connections that will ultimately lead to a career. Some would say that is what used to be called an “entry-level job,” which came with a salary, but for young people graduating into a world of diminished economic opportunity, it’s the unfortunate new normal.

SXSW offers several internships to current students – and only current students — who are expected to work at least 20 hours a week and “more than full-time” during the actual conference. Duties include setting up banners and equipment, managing film and music schedules, transporting supplies and talent around the festival, checking attendees’ badges and all sorts of other vital work.

When it comes to for-profit employers, the Department of Labor says interns are only allowed if a strict set of criteria is met: The internship must be “for the benefit of the intern,” serving as an actual training program, not a replacement for a paid employee. An employer isn’t supposed to benefit from it; indeed, “on occasion its operations may actually be impeded.”

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“This is like the fashion industry, this is like film,” said Eisenbrey. “There is a long-standing, industry-wide culture of violating the Fair Labor Standards Act.”

Indeed, many others use the relative hipness of their brands to exploit unpaid labor. The Pitchfork Music Festival in Chicago “always has volunteers,” said spokesperson Patrick Tilley. He said volunteers “generally” get to attend the festival on days they are working, though he wouldn’t say how many they have. The CMJ Music Marathon in New York City also uses unpaid labor, according to spokesperson Amy Hintz. She told me “we usually enlist about 200 volunteers,” who earn a badge to enter the festival after working around 16 hours.

For some, that may not be a bad tradeoff. With CMJ badges selling for $350, working 16 hours comes out to making more than $21 an hour, which compares rather well to New York’s $8 minimum wage. Of course, badges don’t actually cost CMJ that much money – if they did, the company would elect to pay the $8 an hour. While individual volunteers might find working for a badge to be a good deal, doing so does systemic harm, further disadvantaging those who need to work for money for things like food and shelter, not concert tickets. It’s also not legal. If CMJ wants to offer free admission as compensation, the law says it must give its workers the money to buy a ticket.

But no festival compares to SXSW in terms of unpaid labor. For every volunteer at CMJ, there are more than 15 at SXSW, each one of whom could follow in the footsteps of Eric Glatt and file a lawsuit.

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While much of the labor at SXSW may be free, tickets are not. If you order six months ahead of time, a pass to the film festival will set you back $495, as opposed to $650 if you buy now. A music badge costs $625 if you order ahead of time and $795 at the door, while access to everything costs from $1,295 to $1,695.

With ticket prices so high and labor costs rivaling those of a Cambodian sweatshop, how much money does SXSX Inc. actually make? “As a privately held company, SXSW doesn’t release any financial information,” said spokesperson Elizabeth Derczo when I called her up.

That’s not quite true. The company is quick to highlight its financial impact on the city of Austin, with a study it commissioned claiming that the 2013 event injected $218 million into the local economy. What it doesn’t release is information about the money it injects into the pockets of its board of directors. What we do know is SXSW Inc. brings in enough money that in 2010 the company purchased a brand-new, 20,828-square-foot office building that was appraised at $4.8 million.

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“Are we getting rich? What is rich? I’m not sure what that means,” Swenson replied, sounding like someone who is certainly not poor. “To me rich means that I don’t have to work anymore. And if that’s the case, I’m not rich.”

In the same interview, Swenson defended his company’s volunteer workforce. “That’s kind of a culture unto itself,” he said. “There’s a lot of people that met their spouses and had babies from volunteering at SXSW.” Some volunteers “return year after year,” he added, and a few have been hired as paid staff (though given the volunteer-to-staff ratio at SXSW, the odds are not in the volunteer’s favor).

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It’s not like that matters, though. In the field of art and entertainment, low-level laborers are often expected to forgo money in exchange for a glamorous experience, as if a fun time is incompatible with a paycheck. Sell out in your 40s, maybe, but until then the industry is to be decontextualized from its existence within the confines of capitalism – the fact that some people are making a lot of money off this shit – and the worker content with earning only a story to tell.

But fun isn’t a factor to the Department of Labor. The law is clear that for-profits cannot accept volunteers; one can’t volunteer at SXSW any more than one can work for free at McDonald’s. The law’s so clear on this that even the absurdly nonprofit National Football League decided to end its direct use of unpaid labor at the Super Bowl, which, like SXSW, has for years depended on thousands of volunteers attracted to the idea of participating in a major cultural event. At this year’s game, the New York Times reported that the NFL “opted to hire temporary paid workers for positions in which volunteers had typically been used.” Instead of the 20,000 people originally projected to work for “the experience” alone, there were only 9,000 on hand, technically volunteering for the local government.

If the NFL hadn’t changed its behavior, thousands of people would not have been paid that day. By reducing its dependence on unpaid labor, thousands more dollars were injected into the local economy instead of into the offshore bank accounts of team owners, as good an argument as any for prohibiting the replacement of paid laborers with unpaid volunteers.

The NFL’s decision came in the wake of a lawsuit filed against Major League Baseball (itself a nonprofit up until 2007) by a volunteer at the 2013 All-Star FanFest in New York City. As it happens, that volunteer is represented by Outten and Golden LLP, the same law firm that helped Eric Glatt file suit against Fox. Justin Swartz, the volunteer’s lawyer, told ABC News he hopes the case will set a precedent that stops “for-profit companies like Major League Baseball from soliciting and receiving free labor.”

The unpaid laborers are fighting back and, in some cases, they are winning. PBS host Charlie Rose was forced to pay out an estimated $110,000 last year to settle a lawsuit filed by his former interns, while magazine publisher Condé Nast simply ended its legendarily awful unpaid internship program after being hit with a lawsuit of its own. Under certain conditions an internship can be legal – if it’s for the benefit of the intern, who isn’t displacing a paid employee – but many of those being offered are in fact illegal. And regardless: A corporation that continues to rely on unpaid labor in the year 2014 is going to attract the eye of a lawyer.

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