The argument is that it's a legal risk. Look up the Microsoft co-employment lawsuit for the kinds of things they're scared of. As parent accurately describes, t

The argument is that it's a legal risk. Look up the Microsoft co-employment lawsuit for the kinds of things they're scared of. As parent accurately describes, the contractors are doing the same kinds of work as full time folks... So to avoid the appearance of them being the same (and possibly suing for benefits), basically they get treated as second class citizens. I know of companies where referring to vendors by name is frowned upon.