There is no law that prevents family members from being hired as employees or as independent contractors. The fact that they are relatives may cause the IRS to look at the situation with more suspicion, but if you follow rules for independent contractors it will not be a problem.
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I agree with my colleague.
The post at the link below discusses factors that are involved in an independent-contractor analysis.
Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.Ask a similar question
Just because you list them as independent contractors does not mean they meet the criteria under Ca law. You should consult an attorney who specializes in that issue.Ask a similar question