The problem is that most companies that use subs do not comply with the law.
A subcontractor is given a "project" to accomplish with specifications, budget and deadline but day to day work direction is not to be provided by the prime contractor.
Where the line has always been crossed is the prime is giving the sub day to day work direction, a desk and support so they are not really subcontractors at all.
I do not know the specifics in this case but it has been my experience that both the IRS and NLRP will bring the sky down on the head of any prime that cannot demonstrate and clear separation from prime staff and subcontractor staff.