There's a list of signs that someone hired as a contractor is being treated too much like an employee (i.e. the business thinks of them as an employee but pays them like a contractor to avoid taxes etc.), but any one of those signs isn't necessarily proof.
That's why a lot of companies will pay outside consulting companies when they hire contractors. The contractor is an employee of the consulting agency.
I once wanted to hire a friend of mine at a company as a contractor (he had all of the required skills and my manager was impressed with him). The company wouldn't hire him directly but were more than willing to give him his asking rate net after he went through the consulting agency - ie if he wanted $85/hour as a W2[1] contractor they were willing to pay the consulting company $110/hour so he would still get his $85 an hour.
[1] W2 Contractor means that the consulting company paid the employees half of social security and Medicare and he would be eligible for unemployment. He was getting health benefits from his wife.
