Not so sure about the US, but having seen how contacting developers are working in Canada and the UK, I would say that contracting devs are almost always acting as employees.
In many tech companies you can't even tell the difference between who is an employee and who is a contractor, unless you ask.
In every role I was a contractor, there was essentially no difference between me and employees. Even had gigs where I was in one cube over, had a company badge with my photo on it, and had an @companyname.com email.
There are a few differences: employees are invited to the meeting where quarterly financial performance is shared; they have to do the yearly goals; they are invited to the the year end holiday lunch; and they sometimes get a bonus. The last one is contractors are first cut when there are financial hard times.
Many employees skip the financial meeting. Contractors are often ignored when they sneak into the holiday lunch. For most contractors the bonus is the biggest difference, and the courts tend to agree that is not enough and force the contractors to get the bonus as well.
One company (Sabre) actually had a department (development team that supported HR) holiday lunch/outing. Everyone on the team went, contractors and employees. (Don't get me wrong - I'm glad I had a great manager who would do that ... but honestly the only difference I really ever felt was my paycheck was signed by someone else)
I was a contract consultant for over a decade; I didn't hide any work. I usually didn't work out of their office, but when I did use their resources my working assumption was that any artifact left behind was theirs, modulo any agreement to the contrary.
Intermediate documents, experimental code, etc. weren't offered to customers, but I can't imagine what I'd want to hide. (Aside from my shame, given how a couple projects went.)
Sorry that was quite hard to parse - I mean, what would you expect to appear different to colleagues?
The differences between employees and contractors may reside in the work they do, but doesn't need to, it's in the legal basis of their employment - which other workers can't see. Just like you can't see the wage another worker is getting, rat doesn't mean they're getting the wage you think they are.
The way you know someone is a contractor is they leave after a few months, or they retired and still work there. You can't necessarily tell by their work output.
If an employee and contractor are digging ditches the only difference is likely to be in the paperwork; though possibly the contractor uses their own PSE and tools, but not necessarily.
No, it is not just a matter of which set of papers the company and the individual signed. I expect, and the government expects, that if someone works like an employee they are an employee (and have employee rights and payroll withholding, etc.)
Different agencies have different criteria, but the IRS considers several factors:
The agency [IRS] is more likely to classify as an independent contractor a worker who:
can earn a profit or suffer a loss from the activity
furnishes the tools and materials needed to do the work
is paid by the job
works for more than one company at a time
invests in equipment and facilities
pays his or her own business and traveling expenses
hires and pays assistants, and
sets his or her own working hours.
On the other hand, the IRS is more likely to classify as an employee a worker who:
can be fired at any time
is paid by the hour
receives instructions from the company
receives training from the company
works full time for the company
receives employee benefits
has the right to quit without incurring liability, and
provides services that are an integral part of the company’s day-to-day operations.
A collegue in the UK was forced^Wencouraged to start a limited and contract for his former employer. As far as I can tell that was purely a scheme to shift liabilities and to pay less taxes.
There is a big case in the UK about the BBC forcing the "talent" to set up self employed companies - the tax man didn't like this and is fining people hundreds of thousands of pounds.
Though as presenters they have a better chance of beating ir35 as they can legitimetly work out side of the BBC in a way that a developer cant - eg pa's at events etc
The IRS' concerns aren't exactly the same as the state law concerns, but the lists they use to qualify contractor versus employee seem pretty similar, just with the CA state law test being more simplified (though IANAL, the more simplified CA state law list seems no less likely for companies to run afoul of with this sort of relationship).
