Then why in the hell should this make any difference - other than the fact it is a damn arbitrary law?
It's a law written at the behest of labor unions, who live in terror that their employers are going to reclassify them all as independent contractors to avoid paying health benefits and to allow them to stop doing business with the deadwood among their numbers...most of whom are union officers. ;)
It doesn't matter to them that independent contractor status might be a huge advantage to their members, as the most talented among them could command much higher rates.
The difference is who pays for the other half of the social security taxes. An employee on a W4/W2 basis has income taxes , social security taxes and medicare taxes extracted and forwarded by the employer on each paycheck period. The employer has to pay a matching amount to the IRS. When an independent contractor is involved, the company sends a 1099 for the gross amount of wages paid to the contractor. That contractor is then responsible for paying income taxes, social security taxes, self employment taxes and medicare taxes. Companies like the contractor model because it saves them the administrative overhead of managing W4/W2 payroll and also lets them off the hook for their half of the social security tax burden. That's fine...unless the "contractor" is really a dedicated employee who works for no other business. That is labeled an attempt to evade the tax responsibilities on the part of the defacto employer.
Every law created by governments is an arbitrary law. You don't get to choose which ones to obey.
Then why in the hell should this make any differenceIt's all about withholding.
Not only the SS and income tax withholding, it can also be a way to avoid obtaining Workers' Compensation insurance and quite likely all or part of the liability insurance bill. This type of thing used to happen a lot in the trucking business but most states have tightened their laws.