A subcontractor is a person or business that contracts to provide some service or material necessary for the performance of another's contract.
An employee is a person working for another person or a business firm for pay.
A Statutory Employee is an employee, such as an agent or a traveling salesperson, who is allowed to report income and expenses as a business. If you are a statutory employee, you receive a greater tax benefit by reporting your deductions as business expenses rather than as miscellaneous itemized deductions, subject to the 2 percent limitation.
I do not understand your question of losing a "raise" unless you had a prior agreement with your employer. A subcontractor normally provides a specific service, plumbing, electrical, etc. If you were hired as a "jack of all trades', you were probaly never a subcontractor and were actually an employee from the start.
