I. Summary
The case of unpaid wages for C Language Institute started when 17 instructors submitted a petition to the Gangnam Labor Office for unpaid severance pay, weekly holiday allowance and annual paid leave allowance against C Language Institute on February 22, 2011. The Language Institute claimed that its native instructors were freelancers contracted with its “Agreement for Teaching Services’ and were not employees to which the Labor Standards Act applied. Upon receipt of the petition, the Gangnam Labor Office did a thorough investigation of the petition over 18 months, and concluded that the Language Institute’s 17 instructors were freelancers, not employees (Labor Improvement Team 4, September 28, 2012). Upon this conclusion, 24 instructors (the original 17 and 7 new applicants), began a civil action. On October 17, 2013, the Seoul Central District Court determined that C Language Institute’s native instructors were employees under the Labor Standards Act (2011gahap121413), and ruled that the Language Institute was obligated to pay severance pay, weekly holiday allowance, and annual paid leave allowance. After this, the Language Institute filed an appeal against the District Court’s decision. The main point of this case is whether native instructors are employees or freelancers. Even though the case is ongoing, I will review the criteria for evaluating “employee” status, give a summary of C Language Institute’s practices, list the claims admitted by the Labor Office, and details of the Court’s judgment. I will then anticipate the Appellate Court’s judgment.

II. Change in Employee Status of the Institute’s Instructors
In a previous case, the Supreme Court ruled that the part-time instructors contracted with the Preparatory Institute were not employees in its judgment (96do732) and quoted, “Whether a person is considered an employee under the Labor Standards Act shall be decided by whether that person offers work to the employer as a subordinate of the employer in a business or workplace to earn wages in actual practice, regardless of the type of contract.” This ruling provided “concrete criteria to judge employee status under the supervision of the employer” for the first time, and since then the Courts and the Labor Relations Commissions have judged employee status based on this criterion. However, this criterion was changed in the judicial ruling (2004da29736) regarding the Preparatory Institute’s instructors in 2006. The first change is that ‘being supervised and directed during his/her work performance specifically and directly by the employer’ was adjusted to ‘being supervised or directed considerably.’ This is because the instructors were not supervised or given specific or individual direction regarding the lecture content or methods by the Institute as the lecture characteristics were composed of intellectual activities. The second change is that one additional sentence was included to the effect that the characteristics of “employee” cannot be denied because of the absence of these items determined at the employer’s unilateral discretion by taking advantage of his/her superior position. Such items which may be determined by the employee’s superior position are the employer’s payment of basic wages, payment of business tax, income tax, and registration of the four social security insurances, and those items shall not be included in determining whether employee status exists or not. The following judicial ruling is the standard criterion used to determine instructor status under employer supervision:
“Whether a person is considered an employee under the Labor Standards Act shall be decided by whether that person offers work to the employer as a subordinate of the employer in a business or workplace to earn wages in actual practice, regardless of whether the type of contract is an employment contract or a service agreement under Civil Law. Whether a subordinate relationship with the employer exists or not shall be determined by collectively considering: 1) whether the Rules of Employment or service regulations apply to a person whose duties are decided by the employer, 2) whether the person has been supervised or directed during his/her work performance considerably by the employer; 3) whether his/her working hours and workplaces were designated and restricted by the employer; 4) who owns the equipment, raw material, or working tools; 5) whether his/her position can be substituted by a third party hired by the person; 6) whether his/her service is related to creating business profit or causing loss directly like one’s own business; 7) whether payment is remuneration for work and whether a basic or fixed wage is determined in advance; 8) whether income tax is deducted for withholding; 9) whether work provision is continuous and exclusive to the employer; 10) whether the person is registered as an employee by the Social Security Insurance Acts and other laws, and 11) the economic and social conditions of both sides. Provided, that as whether a basic or fixed wage is determined, whether income tax is deducted for withholding, and whether the person is registered for social security insurances could be determined at the employer’s discretion by taking advantage of his/her superior position, the characteristics of an employee cannot be denied because of the absence of these mentioned items.

III. Actual Facts
C Language Institute has used native instructors which it considered to be freelancers, not employees, for the past twenty years, with some characteristics as follows:
1. Contract relations: The Language Institute signed an ‘Agreement for Teaching Services’ with native instructors to provide foreign-language teaching services, and maintained contract periods of one year.
2. Working types: (1) The instructors used textbooks as determined by the Language Institute; (2) The instructors did other work in addition to teaching, such as meeting students’ parents, etc; (3) There were no other rules of employment or personnel rules applying to the instructors, but they had to observe the ‘Instructor Code of Conduct’ by adhering to a dress code and the teachers’ service regulations; (4) The Language Institute installed CCTV cameras in each classroom and monitored the instructors; (5) The instructors used the classrooms provided by the Language Institute at the designated times.
3. Income characteristics and payment types: (1) The instructors were paid hourly wages starting at ₩30,000 per hour in proportion to teaching hours; (2) The instructors paid business tax and not income tax, and were not registered for the four social security insurances.

IV. The Language Institute’s Claims
The Language Institute’s instructors cannot be judged as employees under the Labor Standards Act when they are measured against the criteria to judge a subordinate relationship with the employer as shown in recent Supreme Court rulings. There are some signs to suggest employee status, while other signs point against it. However, overall the signs denying employee status are much more obvious. Even those signs which suggest employee status were caused more by the job’s distinct characteristics than by the employer’s superior position. The Language Institute’s foreign instructors stayed in Korea for a short period of time and earned money through freelancing activities while they lived here; furthermore they signed an agreement to provide teaching services freely on an equal footing with the Language Institute, at their own discretion.
1. Contract relations:
(1) The Language Instructors signed an ‘Agreement for Teaching Services’ freely on an equal footing with the Language Institute, at their own discretion, and understood the character of the agreemen