Further, your insurance company would not know you had employees driving around. You can fight it in court. But, I'm guessing you lose. Now, despite the above, I know there are thousands of people illegally classifying employees as contractors, and no harm is befalling them. More often than not, nobody is paying taxes on social security, Medicare, workers comp.
Federal unemployment comes to mind also.
However, employment relationships do turn sour and it is under these conditions that you might get hurt. Hired lady to write player's term papers. Have more time to play ball. No one paid into unemployment. It is reassuring to know you can fire somebody for just cause and not fear such reprisal under reclassification.