You have to pay for unemployment insurance. The more people who make claims against you, the higher your insurance gets. You probably aren't going to get charged 100% of the employee's unemployment, but you get charged a goodly chunk.
That's exactly right. For unemployment insurance you pay a percentage of your payroll to the government. The percentage depends upon the number of claims your ex-employees have put on the pool of money in the unemployment insurance scheme. More claims means a higher percentage.
That makes the cost of a replacement employee higher because you're paying for the cost of prior employees' unemployment claims when you are making unemployment contributions for the new employee.
The IRS is very picky about what constitutes an independent contractor. This has long been abused by companies trying to skirt employment law and avoid payroll taxes. They have a litmus test of sorts to determine whether someone is an employee or an independent contractor (tl;dr: if you treat them like an employee, they're an employee). And of course, there are significant penalties for getting this classification wrong.
My lawyer (a tax attorney) said this is rarely prosecuted on independent contractors who are themselves incorporated (along with things like actually have a contract etc). From my own experience this is true as well. Think about it, the IRS would have to give back all of the matching that the contractor (agent) did when they collect from the employer (principal).
What a policy? What would you do with people who get fired? It's pretty rare to lose your job at one place and pick up a new one the same day. How are they going to finance their life until they find a new job?
In other countries where employee protections are better there is usually an actual written contract in place that says employment must continue up to two months after notice is given from either party.
And yes, that does make contractors more practical but that's good because it pushes contract rates up.
