Without seeing your particular setup, I would tend to agree with the contractor. The end grain of wood does absorb water much more easily than the sides. If there is a chance that water or high humidity will be present and any chance at all that there will be absorption into the end grain, you will at least have gaps develop between the boards at the bottom and probably have cracking eventually. If you have something like rubber or vinyl tile on the floor under the wood or you sealed the ends of the boards, you may not have much of a problem.
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