I'm not saying the employee would win, but nor would your scenario occur, in most cases. They'd just pay them off. It's easier to avoid that entirely and offer

I'm not saying the employee would win, but nor would your scenario occur, in most cases. They'd just pay them off. It's easier to avoid that entirely and offer severance. To get back to my original point, being a real employee rather than a contractor means there's a cost to arbitrary termination, which provides the employee with some additional job security. This is one of the many reasons why one might prefer to be an employee, rather than a contractor, even if there are tax implications.