The IRS portion of your question is easy, they have very clear cut requirements as to what makes an employee VS a 1099
States however very so can't help you much there.
In NY you only have to show that the employee made the current state minimum wage on a weekly basis, plus any overtime
you CAN NOT avoid paying overtime which is the single biggest issue most run into, well that and trying to claim people are 1099 when in fact they are employee's
I'll try and keep this simple if an employee unit rate for the week is $875.00 total and will say it took 40 hrs, then HRLY rate is 21.88 now if employee say's they worked 60 hrs to make that same amount then there rate is 14.58 per hr
If state min. wage is 15.00 then you are required to adjust them to the min 15.00 hr plus now Overtime for the 20 hrs over 40
So 40hrs at 15.00 = 600.00 plus 20hrs at 22.50 ot rate=450 = 1050.00 gross pay
Please keep in mind this is only an example I would never advocate paying min. wage ( except maybe to a few of you and you know who you are, LOL )
Best advice would be to make sure you have a good accountant and or payroll company as they can best guide you for the states your working in.
hope this helps you can always PM me if not
