"Maybe we need to tell the employee to get to the employer and tell them it is not the appropriate way to report bonus and so on."

Yes, someone needs to get this action corrected. That doesn't mean the employer cares, though.

And no one here is going to debate this with you. This is not the place to argue something laid out by Congress and by IRS regulations and rulings.

1099-NEC, means "NonEmployee Compensation" which implies paid for services. It is from the Box 7 on the 1099-Misc in the past; it is a reactivation of a form not used since 1982.

So, either you have an employee paid by the employer and incorrectly reported; or, you have a person paid as if they are running their own business; or, you have a prize or award or gift from someone other than the employer, reported on a 1099-Misc as Box 3.

But keep in mind: employers report compensation on W2. Earning a commission, a bonus, a performance award, etc, from your employer is part of being employed and that means reported on W2.