Fall 2006,I found a great job through a staffing agency. The job is Office Manager with a very small service firm. After 2 weeks the company "bought" me from the agency for several thousand dollars. To meet their budget needs, they offered to bring me to their staff as an independent contractor until the close of 2006, then switch me to salaried status with benefits at the first of the new year. I am the sole support of my family and household.
Great pay, close to home and FUN people: I reluctantly agreed to the arrangement. I have no prior experience with this status.

I filled out a W-9 form. There was an email stating the plan to the agency, but never an actual contract offered or signed.

January 2007 arrived and the Owner began daily promises to "sit down and discuss my package" with me, but was always unavailable to do so. As the Payroll person, I was even directed to begin deductions for for Medical Insurance for my family and me. I was assigned increasingly more weighty duties and responsibilities

In anticipation of my new Employment status, I traded my old "clunker" car for a later model. The Finance company was even provided with a letter from this company stating their intent to transition me to salaried status, imminently.

Ultimately, the car finance company called me to advise that my "employer" had contacted them indicating a change of intent (of which I was never directly notified). I was asked to return the new vehicle.

Now the owner has directed me to to take the next 3 weeks off unpaid (while the accountants close out 2006) and return to work at possibly a lower hourly rate.

I need to know , since there was no contract, do I have ANY rights?
Without a contract, does that mean that by default I was an employee? Can I file for unemployment?

Need guidance, please. Thanks.

I would file for unemployment and forget about this company. The owner sounds very confused and asking you to take 3 weeks off is outrageous. I would look for another job and go back to the staffing agency also.
Good luck.

Actually you can't file for unemployment, 1099 independent contracts don't get unemployment, since they are considered self employed, not an employee.

Also you realised that as a contract employee about 33 percent of what you were paid had to be paid out in taxes. So often it sounds a lot better than it really is for a person that is not getting paid a large enough amount.

And really if there was a promise or intent, they can change their mind, or switch you and let you go the next day. It would appear they are not making much money or found they can hire cheaper employess and want to do so.

I would say you need to look for another job, but if the lower paying is all you got, get it for now and find a better one