Karl Marx wrote that labor was fundamentally different to other products - you were not selling a good, you were selling the ability to produce goods. Therefore, he argued, free-market rules of supply and demand did not apply. Apparently it escaped his attention that a company hiring a wheel barrow or a cement mixer is effectively doing the same thing (buying the means for production as opposed to a product itself).
Unions are proving to be pretty much a thing of the past, and they are struggling to make themselves more relevant. They have a problem. Most union ideology is based on a demarcation between workers and bosses. Indeed these terms have become sufficiently overloaded to suggest replacing them with neutral terms, such as labor sellers and labor buyers.
Modern technology and changing attitudes are breaking down the workers/bosses distinction. Contractors and sub-contractors who both buy and sell labor are choosing to refuse to give themselves either label. Consequently labor buyers can avoid problems with unions by dealing with contractors, and labor sellers can avoid having to work within restrictive and inefficient frameworks by calling themselves contractors.
A sideline of employees is the set of rules on discrimination. It is illegal to discriminate against an employee (or potential employee) on the basis of race, gender, religion or marital status. However no such rules exist for business partners. Contractors and sub-contractors are effectively business partners, so this provides a convenient work-around for such rules. It may seem inefficient to employ temporary contractors at exorbitant rates, but the savings are in avoiding law-suits for not employing members of disgruntled minority groups.
This is why such minority groups are trying to force contractors to be legally classified as employees. However, every time the legal definition of employee is extended there are groups of people who will set up their relationship to be just outside it.
For instance, one of the criterion in the definition is whether the contractor works on the premises. Information technology workers can work off site, or work in shared-cost accommodation, which they can pay for themselves. Another criterion is whether they normally use equipment belonging to the labor buyer. This can be circumvented by the contractors using their own computers.
The more inefficiencies exist in the rules for employees the more effort business people will go to in order to avoid meeting the criteria.