QB Issue Resolution:
If they are working for you and you are paying them then they would be vendors. Customers are for people who you do work for and who pay you.
Resolution for Issue 'Contractors – Payee vs Vendor' available: Yes (Solved).
Source: Intuit Community forum.
Contractors – Payee vs Vendor: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.Support for Customers
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