Wavie ,
I have devised a couple of forms over the years that I use when hiring people.
I have a "subcontractor" form that says they are contracting from me to do certain jobs, and that they are responsible for any accident that may occur.(on paper)
Don't know how well it would hold up in court, but I do make it clear that I am not responsible if they agree to do a job and know the risks.(on paper)
I also have them sign a "non-compete" form which says that if they should decide to go on their own they are not allowed to compete for my accounts for one year.
So far this has happened 2 times, and I never took it to court, but again, I do not know how well it would hold up. It is meant to be a formality that hopefully honest people would respect. The people who decided to compete against me did not last.
The good thing is that it at least gives your workers the idea that they are responsible for their own health insurance, etc, and I treat the workers very well, (incentive pay, good pay in general, etc.)
If I hired "employees" I would instantly lose 40 % of my income, and be subjected to all kinds of laws,expenses, etc. It is a shame, but that is the way it is. :
All in all, hiring subcontractors is legal, but it is a fine line that has to be followed closely in order to remain as such.