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It is entirely legal, and my understanding is that it doesn't matter where you work or not. The employer is supposed to provide extra compensation for the taxes you're going to have to pay as well as the benefits you're missing.
In my business life, I see lots of companies that do business like this, and it's a perfectly ethical way for a small business to operate. When I owed the fencing club, all of our coaches were 1099 employees, but that was because we couldn't have afforded to operate any other way. It wasn't that we didn't want to pay unemployment, WC, etc., but those additional costs would have sunk the company. However, if it's a larger business, like Wachovia, it's really not, in my book. If you were actually building something physically (like a building or a product), then I'd say that it was dangerous to the company as well, but in this case, that's not as much of a concern.
One thing that you should know is that if you get injured at work, you're going to have to file a general liability claim against them. New York is notoriously worker-friendly on that front (at least at this writing), so keep that in mind if something happens.
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"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin
"There ought to be limits to freedom." - George W. Bush
"We have met the enemy and he is us." - Pogo
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