It's literally illegal to treat contractors too well.
True contractors won’t care: they work for themselves and have multiple clients anyway. But these "red" people are employees in all but name, so that the companies can save money and other protections. A small slip up by Google (Apple/FB/MS/tons of others) and these folks get the protection they deserve.
There should be a simple test that if a person is working at only one client for too long (3 mo?) then they are to be converted to an employee. There's no reason for these middleman employers to exist except to make people disposable to companies. If that's the case, then they should be cycled in and out with a higher frequency. Nobody should remain a "red badge" at Google for any significant length of time.
It shouldn't.
It's clearly more linked to the type and structure of work performed.
Some companies will even go as far as to prevent you from having multiple clients. Try asking anyone who contracts for Apple if they have any side work…