Contractor Misclassification Laws

These employees are all contractors on paper. Probably to get around the rules you mention.

https://en.wikipedia.org/wiki/Misclassification_of_employees...

Because chintzing your full-time employees by calling them "contractor" and denying benefits is against the law.

The United States has employment laws. Hiring someone as a contractor and then treating them like an employee also likely violates US law.

Some labor laws are pretty strict, where if you treat them like an employee, they are an employee. This is common in the US and companies have to be really careful, otherwise a contractor can come after them and impose a pretty big financial burden.

Wouldn't it also be a tax thing? Here in the Netherlands we have tax laws to prevent this kind of things, where if you can't choose your own hours/days/work and are essentially employed, but pretend to be a contractor, for all tax purposes the company is your employer, even in hindsight. Makes hiring people as contractors pretty tricky for startups sometimes.

I'm assuming it's related to the legal minefield of trying to avoid compensating their workers as employees:http://arstechnica.com/tech-policy/2015/03/startup-workers-s...

One argument is that it may not be actually legal to treat them as contractors. See https://www.irs.gov/newsroom/understanding-employee-vs-contr...

IANAL, but AFAIU this will violate labor laws in many countries. For example in the UK, if you are a contractor that only works for one employer all year, you are considered an employee. And if the company does not pay tax to the UK it is in violation of labor law.

The illegal bit isn’t the pay structure but the treatment of a contractor as an employee. Both the European and US laws make this distinction with similar criteria. This is to make sure companies aren’t avoiding their obligations to employees. And just from a moral perspective if you’re expecting someone to act like an employee you should treat them in kind.