One of the best ways to reduce your $$$ liability is to live in or establish residence Florida where a lot of what you own can be judgment proof. Things like your home, IRA, 401-K, Annuities (ways to use, save and keep cash safe) and I'm sure that there are others... That's why so many well paid athletes have residency here and protect money in large expensive homes.
Note the distinction hinges on whether, and to what degree, the DZ retains to itself the right to "control what will be done and how it will be done" (employee), as opposed to controlling only the result of the work, but not how it's performed (contractor).
I'm no longer contracting other instructors, however the distinction in my mind was always the details of their work schedule. I'd ask them when they'd be available and schedule work accordingly. I'd also encourage and sometimes help them find work elsewhere when I didn't have enough. My requirements related to the manner in which they did their work were pretty minimal...follow the BSRs and/or standard industry practices, don't hurt anyone, and don't be a retard.