If you are controlling how work is done then you have an employee. If subcontracting is unacceptable and you are still hiring contractors then you are just trying to run around employment law, at least in the US
to me it makes zero sense to hire a vetted contractor who can then just toss say, classified data, over to some unknown random. it's a completely untenable proposition.
In the example above with NDAs and security clearance that can be a perfectly valid requirement, but you can't reasonably be upset if the contractor subcontracts out to someone else with clearance who has signed the same NDA
All of that is solely to get around to requirements with hiring employees like providing benefits, or needing to pay for increased payroll taxes when the company decides to lay a bunch of people off.
It's not right just because the rule of law has degraded so much that the government no longer enforces their own rules