[myprasanna]

Agree with Ted. I've heard so many horror stories from people who thought this way in the beginning. Yishan Wong, would give you good stories about, how zuck tried the contracting route when Accel funded them and very soon pressed the hard revert button.

Jessica - I'm a YC founder too, and most people have strong opinions on this. (http://bit.ly/9uDFfe); Maybe, you should ask pg, what he thinks.

[btucker]

Not to mention the issue that in many US states the enforcement of misclassification laws are on the rise and the penalties are stiff. So unless you can make a good case why a contractor should not be an employee--the main allowed reason being they're performing a task outside of your business's competency--don't outsource to a contractor based in your own state.

[lsc]

Yeah, this has worried me, too. I'd be interested in the best way to hire "contractor like" positions on a W2... e.g. I pay you as an employee but we're both clear on the expectation that you are not permanent.

I mean, I am small enough to dodge the 'wrongful termination' bullet, but I still have to pay unemployment insurance, and really, I think it's just fair to be up front and clear with people about where they stand. I mean, that part can be done verbally, but it would be good to hear what the 'correct' way to do it would be.