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Yeah, said that, or "you'll work on this as a contractor" as contracting isn't classed as being employed by the hirer in some countries. The confused language makes them look like they could give you tax and social security problems, which might deter some good people.
Yep, and this means increased taxes if they hire an American, because Americans have to pay both halves of the employment taxes if they're self-employed and filing a 1099.