Based on what I understanded in US, it is a Tax/HR term. In general, a company hires employee in 2 forms:
1) Full Time Employee, who will receive a W-2 form at end of year
2) Consultant, also called Independent Contractor, who will receive a 1099 form.
Check more information at IRS or...
http://www.dir.ca.gov/dlse/faq_independentcontractor.htm
http://employeeissues.com/ic_vs_employee.htm