Your daughter is being treated an independent contractor or subcontractor, that's also considered self-employed and goes on schedule C.
If your daughter thinks she is misclassified and should be a regular employee, she can file an extra form and pay taxes as an employee. This will start an investigation of the employer, and the specifics of your daughter's employment (hours, control, supervision, etc.) Refer to the links given by the other experts. If your daughter is determined to be a subcontractor, she will owe the rest of the self-employment tax. If she is determined to be an employee, she may be entitled to back wages and some taxes. Either way, the investigation will likely upset the employer and the position will probably end.
Issues of employee or contractor are also handled at the state level, since the state may have many rules for employees that the employer should be following but is not, and that can result in state fines as well as federal penalties.
