Did you completely ignore the fact that the employer is treating them as employees and is deducting taxes and W2s?
There is no "semi contractor" situation where an employer can do as you suggest.
Now, what an employer CAN do is give an employee a "base wage" and then give a commission on top of that wage with whatever rules the employer decides to impose...and the employer doesn't even have to disclose to the employee what those "rules" are. In fact, that is how I am paid. I have a base wage and I get a commission based entirely on how my employer views my contribution to the business.
I also worked for a previous company that had a base wage and issued bonuses based on company performance...again...totally legit.
However, that isn't even remotely what is happening here.

