Google your state and tipped employee laws for example: “Colorado tipped employee laws” and my guess is you will find out what you need to know. Here is what I found for Colorado: https://www.colorado.gov/pacific/cdle/tipped-employees
“a tipped employee is any employee engaged in an occupation in which he or she customarily and regularly receives more than $30.00 per month in tips”
“If an employee’s tips combined with the employer’s cash wage of at least $5.29 per hour do not equal the minimum hourly wage of $8.31 per hour, the employer must make up the difference in cash wages. It is the policy of the Division of Labor that this rule applies on a weekly basis.”
I found this with regard to Illinois law: “Tipped employees must be paid minimum wage, but an employer may take credit for the employee’s tips in an amount not to exceed 40% of the wages. An employer may pay a training wage for tipped employees 18 and over in the amount of $4.65 for the first 90 days if applying the tip credit of 40% or $7.75 if utilizing the tip credit. After 90 days, the rate must be increased to $4.95 if not utilizing the tip credit.”
It would appear that there is no way under Illinois law to not pay an employee at least $4.95 per hour (after the first 90 days)
Similarly, one can find state specific information about contractor status. Here is some interesting reading regarding Illinois law: https://www.illinois.gov/idol/FAQs/Pages/ECAFAQ.aspx
I found these interesting:
An individual performing services for a contractor is considered to be an employee except if is shown
the individual has been and will continue to be free from control or direction over the performance of service,
the service performed is outside the scope of the usual course of services performed by the contractor and
[*]the individual is engaged in an independently established trade or business or the individual is deemed a legitimate sole proprietor or partnership under subsection c of Section 185/10.
A civil penalty not to exceed $1500 for each violation may be imposed. A separate violation occurs for each person improperly classified and for each day on which a violation continues.
For example, if a contractor misclassifies two persons for two days the maximum penalty is $6000. A contractor who willfully violates the Act or who obstructs an investigation can be subject to penalties of double the amount.
Once a person performing services is found to be an employee under the ECA and is found to have been improperly classified, that employee is entitled to all rights and benefits to which employees are entitled under other applicable state laws. A person who is misclassified shall be entitled to receive all salary, employment benefits, or other compensation which the individual lost as a result of the misclassification, including but not limited to all lost wages resulting from not being paid the minimum wage or overtime. An employer can be ordered to reimburse the person for improper deductions such as lost unemployment or workmen’s compensation benefits or to have contributions made on the employee’s behalf.