In the United States the IRS has some fairly specific rules on what constitutes a 1099 Contractor, Freelancer, etc. as compared to a full or part time employee. The main issue is that if your pay is reported as 1099 (instead of W2 Employee income) then the company pays no taxes on your behalf. (For those getting 1099 pay assume ~35% is going to be owed as taxes, social security, medicare, etc. at year end filing). Falsely classifying employees as 1099 contractors is a way for the business to gain leverage on their own taxes while passing all financial responsibility to workers who should be employees.

The IRS has three rule sets to define Independent vs Employee.

01 : Behavioral Control You're an employee if the business controls

• When and where to do the work.
• What tools or equipment to use.
• What workers to hire or to assist with the work.
• Where to purchase supplies and services.
• What work must be performed by a specified individual.
• What order or sequence to follow when performing the work.

If the business is dictating those items (ie: requiring you to be at a desk starting at 8AM and use their computer) then you're an employee, not a contractor.

• If the business evaluates the end product and only the end product you're probably a 1099 contractor.
• If the business evaluates the means and methods of achieving the product you're probably an employee.
• If the business provides the worker with training on how to do the job, this indicates that the business wants the job done in a particular way. This is strong evidence that the worker is an employee. Periodic or on-going training about procedures and methods is even stronger evidence of an employer-employee relationship. However, independent contractors ordinarily use their own methods.

02 : Financial Control

• An independent contractor often has a significant investment in the equipment he or she uses in working for someone else
• Independent contractors are more likely to have unreimbursed expenses than are employees.
• Having the possibility of incurring a loss indicates that the worker is an independent contractor.
• An independent contractor is generally free to seek out business opportunities. Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market.
• An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. An independent contractor is usually paid by a flat fee for the job

03 : Type of Relationship

• Although a contract may state that the worker is an employee or an independent contractor, this is not sufficient to determine the worker’s status.
• Employee benefits include things like insurance, pension plans, paid vacation, sick days, and disability insurance. Businesses generally do not grant these benefits to independent contractors.
• If you hire a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that the intent was to create an employer-employee relationship.
• If a worker provides services that are a key aspect of the business, it is more likely that the business will have the right to direct and control his or her activities. This would indicate an employer-employee relationship.

tl;dr

Know what you should be classified as. If you're a 1099 Contractor make sure you're not being taken advantage of. Also make sure you realize ~35% of your 1099 income is going straight to taxes, social security, Medicare, etc., regardless of what tax bracket you're in.

If you or your coworkers are falsely classified as 1099 Contractors your can file Form SS-8 (a pdf that you can find at the IRS.gov website). Your employer "may be held liable for employment taxes for that worker." You can also file Form 8919 to get your employer to at least pay for social security and Medicare.