I had a similar situation several years ago. The man I hired worked
only part time, had his own tools, and set his own hours. Eventually,
he began working 30-50 hours/week. One day, I discovered that he was
working on other people’s jewelry, in my shop, with my materials, and
on my time. I let him go.
This man then filed for unemployment insurance! Since he was always
a subcontractor, I had never withheld any money from his checks, and
I contested his claim.
I was told that since he worked in my shop, under my supervision, he
was my employee. I had to pay back taxes for him, with penalties and
interest. I was free to reclaim some of this from him, but it would
have involved expensive litigation without any real expectation of
ever recovering the money from him.
I know of others who use subcontracted shop help, but I would not be
casual about the relationship. I would want a clear contract,
spelling everything out. I would want to see a copy of his tax ID
number, and keep it on file. And, I would want to know who his other
clients were. If I was their only client, then I am their employer.