Why wouldn’t it be? The law specifies a minimum standard for permanent employee relationships but even if the relationship is structured otherwise there’s nothing to stop a company being extra nice to contractors.
Most people are interpreting it in the positive sense WRT vacation pay or similar, my experience is its more negative in the sense of if X is on vacation then Y can't be on vacation because we need someone on call 24x7 or release week is the last week of June therefore its assumed all hands on deck the last week of June no vacation.
Setting contact expectations is kinda important, as most employee relationships are considered very feudal serf in nature whereas a contractor could be working somewhere else on someone elses job at any time... its easy to write a contract with a product and a due date, but harder to specify a service of general short term availability for whatever reason.
That was my reaction, as well. If "vacation time" solely means offering a certain number of hours with no work expected—in effect, a bonus—then that's likely fine. But if it's part of a larger expectation around working hours and other employee-ish expectations, then there might be legal issues (though I have no idea how the contractor being outside of the US might change things).
