Hello. I am Oh Seung-hyun, a lawyer at the law firm Cheongchul.

Recently, the biggest issue in the MCN (Multi-Channel Network) industry is ‘Crea-tention’, a strategy to keep creators tied to their company. As the business model of MCNs diversifies with live commerce and private brand (PB) product launches, the need for systematic management and control of affiliated creators is growing day by day.

However, this strengthening of control can be a double-edged sword. As the relationship between agencies and creators goes beyond a simple ‘business partnership’ and the MCN becomes more deeply involved in the creators' activities, the court is more likely to view the MCN not simply as a facilitator but as an ‘Employer’.

In this article, we will address two key legal issues that may arise when MCNs strengthen their control over creators: ​① the risk of ‘employee status’ recognition under the Labor Standards Act​ and ​② the risk of ‘employer liability’ under civil law​, along with recent case law.

1. Risk ①: The moment a ‘freelancer’ is recognized as an ‘employee’ (employee status under the Labor Standards Act)

You cannot feel assured by saying, “We have signed a freelancer contract, so it’s okay.” The court recognizes that regardless of the form of the contract (employment, subcontracting, delegation, freelancer, etc.), if the ​substance is that the work was performed for the purpose of wages under a user-dependent relationship, it is recognized as an employee under the Labor Standards Act​ (Busan District Court Western Support 2023. 2. 17. Judgment 2021Gadan117874).

If a creator is recognized as an employee, the MCN will bear all employer liabilities under the Labor Standards Act, including retirement pay, the four major social insurance schemes, paid annual leave, and various restrictions on dismissal.

​[Check Point] Our company's creator, are they an employee? Criteria for the court's judgment​

Case law comprehensively considers the following factors to determine a ‘user-dependent relationship’.

​Significant direction and supervision:​ Does the user dictate the contents of the work and provide specific and direct instruction and supervision throughout the entire work execution process? (Busan District Court 2023. 7. 14. Judgment 2022Na67180)

(Application to MCN) Does the MCN specifically instruct and request modifications and improvements throughout the entire process from content planning, production, and uploading? (Busan District Court 2024. 10. 17. Judgment 2024No125)

(Application to MCN) Is there an obligation for regular attendance, or is there a requirement to enforce live broadcasting or content upload at specific times?

Irreplaceability of work:​ Is it impossible for the creator to entrust their work to a third party? (Daejeon District Court 2020. 6. 18. Judgment 2019Gadan107231)

​Absence of independent business entity:​ Does the creator operate a business independently at their own expense, bearing the risks of profits and losses? Does the MCN provide broadcasting equipment, studios, editing personnel, etc.? (Seoul Southern District Court 2024. 4. 12. Judgment 2022Gahal108115)

(Application to MCN) Does the MCN absorb the risk of the content production's commercial failure and pay the creator a fixed remuneration? Does the MCN provide expensive broadcasting equipment or editing studios free of charge?

​Compensation as a labor reward:​ Is the remuneration in a fixed salary or basic salary form that is unrelated to views or performance? (Suwon District Court Seongnam Support 2016. 8. 31. Judgment 2015Fixed1162)

​Exclusivity:​ Is there a strong exclusivity to the MCN, such as prohibition on contracts with other MCNs or platforms? (Daejeon District Court 2020. 6. 18. Judgment 2019Gadan107231)

​[Key Cases] Broadcasting Station PDs and Announcers, Academy Instructors Recognized as ‘Employees’​

• ​Recognition of employee status for broadcast station PDs and announcers​The court has recognized the employee status of PDs and announcers who worked under ‘business delegation (freelancer) contracts’ with broadcasting companies. The key evidence includes that ▲ the broadcasting company defined the program's planning direction and provided specific and direct supervision throughout the production process, ▲ the equipment and editing room provided by the broadcasting company were used to perform the duties, ▲ a fixed remuneration was received, and restrictions on appearing in programs from other companies indicated strong exclusivity (Seoul Southern District Court 2024. 4. 12. Judgment 2022Gahal108115, etc.). This can also be sufficiently applied to the relationship between the MCN and affiliated creators.

• ​Recognition of employee status for academy instructors​The court has broadly recognized the employee status of instructors who entered into consignment contracts with academies based on evidence such as ▲ teaching according to the timetable and lesson plans established by the academy, ▲ instructions received for ancillary tasks such as student management and academy promotion, and ▲ receiving a fixed salary or remuneration proportional to teaching hours regardless of the number of students (Incheon District Court 2023. 7. 21. Judgment 2021Godan4915, etc.). In contrast, situations where instructors autonomously determine tuition pricing and discounts, hire assistants at their own calculation, and have incomes determined by the number of students can lead to denial of employee status (Daejeon District Court 2024. 7. 11. Judgment 2023Gadan242094, etc.).

 2. Risk ②: Creator’s mistakes, company takes responsibility (employer liability under civil law)

Even if it is judged that the creator is not an employee, the MCN's legal liability does not completely disappear. This is due to ​Article 756 of the Civil Code on ‘employer liability’​.

According to case law, civil law employer liability can be established even without a valid employment relationship, as long as there is a ​‘substantial direction and supervision relationship’​ in place. In other words, if the MCN is substantially directing and supervising the creator's content production and overall activities, even if that creator is not an employee under the Labor Standards Act, the MCN may still be liable for damages if harm occurs to others as a result of the creator’s activities.

The court interprets this ‘relevance to business execution’ very broadly. If the actions of an employee are objectively related to the business activities of the employer, even if the actions exceed the scope of job authority or are for personal benefit, employer liability can still be recognized (the appearance theory).

(Application to MCN)​ For example, if a creator uploads PPL (indirect advertisement) content after review by the MCN that defames a third party’s honor or violates copyright in a video planned by the MCN, it is likely to be seen as an act related to the MCN’s ‘business execution’, and the MCN may be recognized as having employer liability.

3. Conclusion: Practical check points for legal risk management

The relationship between MCNs and creators can no longer be seen as a simple consignment relationship in many cases. It is important to remember that the legal weight of responsibility increases as the influence of MCNs grows.

To minimize the risks of creator employee status and MCN employer liability, it is advisable to examine the current contracts and operational methods based on the following criteria.

• ​Level of work direction:​ Is it limited to providing ‘guidelines’ rather than giving specific instructions for content planning and production? Are you avoiding specific direction and supervision regarding the ‘process’ of production instead of feedback on the result?

• ​Guarantee of autonomy:​ Can creators decide content production, upload times, and broadcasting schedules based on their judgment? Is it possible for them to entrust work to third parties (editors, fellow creators) without prior approval from the MCN?

• ​Payment structure:​ Is the remuneration clearly linked to the creator’s performance (views, sponsorship funds, advertising revenue, etc.)? Or is a fixed salary or basic salary paid regardless of performance?

• ​Respect for independence:​ Does the creator acquire and use equipment, software, and studios at their own expense? Are activities on other platforms or side jobs generally allowed?

Ultimately, it is essential for the MCN to respect the creator as an ‘independent business partner’ and ensure the corresponding autonomy, which will, in the long run, prevent legal disputes and achieve healthy mutual growth.

The law firm Cheongchul is composed only of lawyers from domestic top five major law firms, prosecutors, and in-house lawyers from large corporations, and a team of specialized lawyers in related fields, rather than a single lawyer, handles cases. Cheongchul provides legal consulting that offers comprehensive solutions for the entire business, focusing on ultimately achieving what the client desires, rather than solving just specific issues. If you need help achieving your goals, please contact Cheongchul without hesitation.