No, it's got nothing to do with workplace protection or wages. The original suit was actually about participation in the stock purchase program (which in the mid-90's was extremely lucrative at MSFT!), something that no contractor would normally expect to get. But because the contractors got free food at the cafe (or whatever), they did. Or rather they got a settlement making up for the stock the courts said they should have been able to get.

Basically, the rule per Vizcaino is "Any benefit offered to salaried employees must be offered to temporary ones too unless you deliberately discriminate against them in all your other benefits not related to their job."

And yes, that's a stupid rule. But it's the rule, and it's universally enforced at every US employer large enough to have a legal department.

Yup, these companies could always just hire outright