You can't just flip flop between employee and contractor. Which she is depends on the nature of the working relationship between her and the company, and you can't legally switch from one to the other unless those working relationships also change. See here for more.
https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...
As noted, she can't be an employee and also be paying both halves of social security and medicare, something doesn't sound right.
Also as noted, for the same amount of work, an independent contractor needs to be paid more to make up for the employment taxes, as well as all the other benefits they forego (like possibly health insurance, paid vacation, unemployment insurance, workers compensation, 401(k) match, etc.). At my particular employer, the cost of these benefits is an extra 40% on top of the gross salary. Getting paid an extra 7% to cover the self-employment taxes is the minimum gross-up I would consider.
