This is very common, perhaps even the norm for web development shops. Not sure about start-ups. Probably almost never happens with big corps. I don't see a pro

This is very common, perhaps even the norm for web development shops. Not sure about start-ups. Probably almost never happens with big corps. I don't see a problem with it. I don't care what my employment status is as long as I'm getting paid. The only difference between contractor and employee is the forms that the employer needs to fill out and that's not my problem. However, if I'm working as a contractor then I'm not going to change anything for the employer. I'm still going to charge my contractor rates and I'm still going to take in new contract work. It's too much of a risk to throw my business cycle out of whack while the employer tries to make a decision.