Yeah I get this and it doesn't apply here. The payer in this case did not have the right to control only the result of the work which is the crux of the situation.
The law, nor the linked resource, stipulates that any 1099 relationship can be subcontracted out by anyone, let alone without disclosure. If that were the case the explicit option to hire onshore vs offshore on sites like Upwork would be meaningless, or a matter of arbitrage.
Not having the right to control only the result makes them an employee which in turn makes them eligible for benefits and so on. This is the specific difference between a contractor and an employee.
The problem is that you can't just have what are effectively employees but on a contract basis under law. It opens you up to liabilities, as Uber has been experiencing.
The closest I think you could get is actually contracting a PEO that takes the individual under employee status and assigns them specifically to your company under contract. Being an employee of the PEO means that they can in fact control these aspects of the job, and you aren't contracting them, you are contracting the PEO who subs out to them.
> Not having the right to control only the result makes them an employee which in turn makes them eligible for benefits and so on. This is the specific difference between a contractor and an employee.
This isn't actually even the root issue.
The contractor almost certainly violated their contract by sharing NDA-covered materials with an unauthorized third party.
The contractor also shared access credentials to the company's systems with someone else and then facilitated fraudulent interactions wherein one person claimed to be someone else.
Being a contractor doesn't give someone carte blanche authority to do whatever they want with the company's materials (codebase, design documents) and secured systems.
It seems intuitively like you can't just ghost in someone who didnt even sign the copyright assignment stuff with the right party, ndas, or undergo a possible background check.
there's a whole industry that does this. they're called agencies. taking responsibility for quality and ensuring no subs or staff do anything sketchy is expensive and hard, as such they typically add a 100% cut to what gets billed out to the client.
The law, nor the linked resource, stipulates that any 1099 relationship can be subcontracted out by anyone, let alone without disclosure. If that were the case the explicit option to hire onshore vs offshore on sites like Upwork would be meaningless, or a matter of arbitrage.