Indeed, I always laugh when a small business person tells me that they don't have any employees; "they are all independent contractors," they tell me. Well, that may or may not be, and there are legal IRS definitions of such, and lots of employment lawyers specializing in suing employers who fail to meet that legal definition. Worse, once the IRS rules against a business owner or now, employer they can demand unpaid income taxes on the wages paid, and the state and federal government can demand payroll taxes and withholdings. Failure to pay would result in seizure of assets, bank accounts, etc.
In case you don't know what the rules are for independent contractors, I suggest that you look very closely at the law, and also recent case law as there are a number of cases pending in court which might change the definition further. The IRS says that you may not tell your workers, those workers you claim to be independent contractors;
1. The Time
2. The Mode
3. The Manner
2. The Mode
3. The Manner
It is very hard to do this if you are assigning workers to various tasks dealing with customers and/or sending people onto job sites. It's also very difficult to do that if you have a fixed location and you tell workers when to show up for work, even if they are doing piece meal and being paid per unit completed. It's very hard to qualify someone as an independent contractor, and only some business models allow for this.
There are also business opportunity and franchising laws which are very easy to break if you have your independent contractors working under the same logo, and brand name, or if you charge them over a certain amount per year to become one of your distributors or independents. The laws seem to be getting tougher, and making this venue even more difficult, but there is a very good reason, at least from the government's perspective.
The IRS and the government realize that if you hire independent contractors, there is a good chance that they will not pay their income taxes. If they don't pay, the government doesn't get the revenue, therefore, they want someone to collect that money for them, thus, doing their job for them. They want an employer, a larger entity they can control to do that work for them. Otherwise they will likely not get the money. Indeed, I guess you can understand why small businesses are upset about this, and why the government is so adamant about the rules and regulations and the definitions which are associated with this contracting of independents scheme.
It is unfortunate that employment lawyers are using this to break contracts, and it is also too bad that most small business owners do not know what they're getting themselves into when they try this tactic. I suggest you contact a good business lawyer before attempting it. Please consider all this and think on it.