Whether somebody is an employee or a contractor is decided by how the work actually happens, not by what the contract says or how they are paid.
This catches out businesses acting in complete good faith, because the arrangement usually starts genuinely casual and drifts.
What the tests look at
The details vary by region, and the themes are consistent:
Control. Do you set the hours, the method and the sequence, or do they?
Integration. Are they part of your operation, wearing your uniform, in your van — or running their own business that you are one customer of?
Economic reality. Do they work for others? Do they carry their own insurance, tools and risk of loss? Can they profit from doing the job efficiently, or are they simply paid for time?
Exclusivity and duration. Somebody who has worked only for you, full time, for two years is very hard to argue is running their own business.
Why it matters
Misclassification is assessed backwards, with unpaid payroll taxes, penalties and interest. It can also expose you to a workers compensation claim you have no cover for, which is the version that does real damage.
The legitimate uses
Subcontracting is normal and defensible where it is genuine: a specialist trade, overflow capacity, a genuinely independent business with its own customers and insurance.
It is also the right way to test demand before committing to a hire, because it converts a fixed cost into a variable one — see fixed and variable costs and hiring decisions.
The practical minimum
Get a certificate of insurance from every subcontractor before they start, keep it current, and do not let the arrangement quietly become full-time-and-exclusive without revisiting it.
This is a question for your accountant on the specifics. The wiki can describe the tests; only they can apply them to your situation.