What would I need to consider taking on an employee as a vendor vs hiring them the traditional manner?

I'd be extremely careful here.  One of the most common mistakes businesses (large and small) make is to employ a person they consider to be a "contractor" only to find out the person meets the legal definition of an "employee."  What you are describing seems pretty clearly to be an employment relationship, not a "vendor" or "contractor."  Here's some of the analysis.  A "contractor" or "vendor" operates his own business and works for a variety of customers/clients; an employee works for a single employer. A "contractor" or "vendor" has authority to hire and fire his own employees; an employee does not.  A "contractor" or "vendor" usually has his own business license and complies with all laws applicable to the business; an employee does not.  A "contractor" or "vendor" determines how he will perform the work and does so without oversight from his client/customer; an employee takes his instructions from the employer and performs the work as assigned to him.  You get the idea. Now, what happens if you set the person up as a "vendor" and it later turns out he/she is actually an employee?  You're doomed.  First, you will own significant workers compensation premiums since you are required to provide WC coverage to your employees - and you haven't paid for the "vendor's" (who is now an employee) coverage.  Worse yet, you have not with held taxes from the "vendor's" (now an employee) wages.  YOU therefore owe the taxes, and these taxes are your PERSONAL responsibility - not the businesses.  Also, there are very serious liability implications.  For instance, what if the "vendor" is involved in an auto accident while running an errand for your business in the course of his/her work?  Your business may be liable for any injuries or damages caused by the "vendor's" negligence, but you don't have the "vendor" covered on your insurance.  I could go on and on. My advice is that if you need an employee, you hire one and comply with all of the nightmarish laws, regulations and other requirements.  Trying to avoid these requirements by claiming the person is a "vendor" or "contractor" can lead to disaster.