I think we all agree that this atypical employment form is a shady business disapproved of in most states, except that one state that benefits from it all. But that doesn't mean it's still not happening. Just the enforcement of the rules that's lagging...
I am not defending the one who came up with this BS, but don't forget that 'contractors' are their own worst enemy sometimes. Deliberate tax dodging happened systematically and now (some) are paying their dues.