Under California law, the question of whether one is an independent contractor or employee depends on the particular facts of each case. Generally speaking, the most important factor is whether the putative employer has the right to exercise control over the manner and means by which the contractor/employee performs his or her job. There are other factors as well, such as whether the parties believed they were creating an employment relationship, but the primary factor is this right to control. An employer who fails to pay wages may be held responsible for the unpaid wages, liquidated damages, interest, penalties, attorney fees and costs. The Labor Commissioner will award some of these items, but you would have to go to Court to seek others.
I cannot address your tax concerns. You should speak with a qualified tax professional on that issue.
Disclaimer: This answer does not constitute legal advice and cannot be relied on, as each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.