I think there's a distinction here, which is often lost due to similarity of the language.
One class is "contract employee". These people are basically treated as second-class employees (with just enough arbitrary restrictions to enforce that) of the company they effectively work for.
The other class is "employee of a contractor". These people are real employees of a company that hires them and provides them benefits. The company they work for then sub-contracts to various other companies and uses those people to fulfill the work under that contract.
Since both cases use the term "contractor", and the former is far more common in the minds of everyone here, its easy to get the two distinctions confused.
In my experience "contract employees" normally work for a third party company that gets contracted by the hiring company. Then, the third party contracting company pays their employees after deductions and taxes. Otherwise, if not working for a third party company those individuals may be classified as independent contractors. When they are classified as independent contractors there already are limits on the number of hours that can be worked before they get turned into employees.
One class is "contract employee". These people are basically treated as second-class employees (with just enough arbitrary restrictions to enforce that) of the company they effectively work for.
The other class is "employee of a contractor". These people are real employees of a company that hires them and provides them benefits. The company they work for then sub-contracts to various other companies and uses those people to fulfill the work under that contract.
Since both cases use the term "contractor", and the former is far more common in the minds of everyone here, its easy to get the two distinctions confused.
Maybe we need better terminology?