And that said, I'm still fucking pissed that my state labor regulator basically told me I wasn't a contractor and had no right to negotiate a contract like that, and basically scared me into not being able to help them in the future.
When the state steps in on contractor-vs-employee issues, they have no authority to do anything to you-the-contractor. They can only punish the company by making them retroactively pay your portion of payroll taxes. "Labor regulator" doesn't actually mean they regulate the laborers, it means they regulate employers. You can negotiate any contract you damned well want - Whether the employer can get away with it? Not your problem, so sleep well, friend! Worst case, you end up owing 10k less in taxes. How awful, right?
If you really want to worry about it, you can either work through a contracting agency (aka "give them a cut"), or just make sure you having more than one client at a time, and the whole issue becomes moot. This only comes up when you contract directly with a single client for long stretches. FWIW, my employer actually has a standing agreement with a local outsourcing agency for exactly this purpose - If we need someone back for a few weeks, they sign up with the token shell-temp-agency and get "placed" with us. I honestly don't know how well that arrangement would hold up in court, but again, who cares - not the contractors who have the potential to get screwed here.
None of that relates to the present situation, however - Microsoft's layoff memo spells it out pretty clearly: "We expect to focus phone production mainly in Hanoi, with some production to continue in Beijing and Dongguan. We plan to shift other Microsoft manufacturing and repair operations to Manaus and Reynosa respectively, and start a phased exit from Komaron, Hungary". Microsoft has too many highly paid Western workers, and needs more 3rd-world slaves. Simple as that, really.