During the 1996-1998 time frame, I switched from full time to "consulting employee" status at my current company. My full time employer offered me a much better salary, benefits, stock options and fairly interesting work. The status change resulted in a payout of my accrued vacation time and a loss of benefits. My compensation was changed from salaried to "hours worked". No hours were scheduled. I could work zero to as much as requested. The hourly rate was increased by about 50% over the equivalent pay for salaried staff. That was to compensate for dropping medical benefits, vacation and sick pay. When I returned to full time status in 1998, my compensation package was restored with full benefits. Just having a private office again was reason enough to return. Working at an internet startup isn't all it's cracked up to be. The 16 hour days, 7 days a week were just not worth the probability of a life long handicap from repetitive stress injuries.
I don’t understand the problem. You said that as a contractor you could work as many or as few hours as you wanted, but you were glad to go back to direct status so you didn’t have to work yourself to death. Why not just work 8/40 as a contractor, since you were given the extra money per hour to pay for insurance, vacation, etc? I definitely agree with you about the value of having an office with a door, though.
I guess the bottom line is different strokes for different folks. I value the compartmentalization I get as an independent. I buy my own health insurance, or not. None of my customers is going to get a printout of what medications I buy or what I see the doctor for, etc., like an employer may. No information escapes the compartment except things that actually have to do with our relationship.
Of course, my situation is different from the one in dispute here. I work for many customers, at my location as well as theirs, and the work for which I contract includes more than just my man hours, so there is no question that I’m truly an independent.