My company does this to an extent, but they claim it's to avoid trouble with "co-employment". As it was told to me when I was myself a contractor (that is a reg

My company does this to an extent, but they claim it's to avoid trouble with "co-employment". As it was told to me when I was myself a contractor (that is a regular employee of another firm who hired me to work on-site at the company of which I'm now an employee), they have to withhold certain benefits because if they treat me like an employee, I could sue to get them listed as a co-employer, making me eligible retro-actively for benefits the regular employees received during my time there. I've never quite understood the system, to be honest. My company pays a contract company for my time. The amount they pay for my service is much more than the cost of hiring me as an employee, because they have to pay my portion of my managers' time along with enough to cover my benefits and some profit for the contract company. The company could have just hired me directly for some portion of the cost. The only downsides I see are that they can tout they didn't fire any employees when things get tight and they slash the number of contractors.