Sometimes.
I run a small IT consulting firm. All of our consultants are their own S-Corps or LLCs - so its all corp to corp to corp. No W-2s involved.
Which highly paid IT professionals love - you get to write off the commute (keep an office at home), you pay yourself a “reasonable” salary and only pay SS taxes on that, you book your training in Hawaii and write off part of the trip - and you give yourself a W-2 - the rest arrives to you as pass through ordinary income, but you avoid self employment taxes. Its a great deal in terms of reducing tax burden.
Corporations sometimes demand W-2 (and we can do it if we have to - but its harder to find the level of developer we deal with willing to do W-2 - financially, it isn’t nearly as advantageous and the people we deal with are smart enough to know that.) Corporations like W-2 contractors through an agency because it gets rid of any question of their involvement in employment status.
The third type is 1099, where the consultant isn’t incorporated and you file a 1099. We avoid those. W-2 or corp to corp. Safer for us. We either control employment taxes - or we are paying a corporation and the taxes are their problem. (And incorporating in Minnesota will cost your $135 - off the top of my head - which is currently a little fuzzy - Redbreast cask strength).
(I tell all our consultants when I onboard that they need an accountant, insurance agent, and attorney - if they don’t have them already. Its possible to hold off on the attorney, but get yourself an accountant and insurance)
My husband and I have worked all three ways during our own consulting careers. If they pay bench time (few do right now) W-2 all the way. If I worked for Accenture or McKinsey or something, I’d expect, and want, to be W-2. But if you are really an independent contractor - corp to corp.
However, it doesn’t sound like k9bfriender’s employee is the sort of highly paid IT professional we tend to deal with who is running their own S-Corp because they are savvy and have an accountant and attorney that is giving them advice on maximizing their income.