In the restaurant industry, the issue of "live entertainment" can cause complications in classification.
In most situations, these individuals are classified as independent contractors. The Internal Revenue Service has 21 distinctive factors they will use to determine if someone is a true independent contractor. The state uses these factors as guidance to determine if the individual is properly classified under California law.
The easiest way to avoid complications is to begin with a written contract clearly stating the contractor's specific purpose. This doesn't end the analysis by the IRS and the state. The single biggest factor in their decision-making is the amount of control the employer has over the worker in question. If there's too much control placed on someone, the misclassification can occur.
Generally, the more rules and restrictions in place about how they behave, what they have to wear and how long they have to work, among other factors, the more they should actually be handled as company employees.
If the decisions are left to the individual, it's more likely they are properly classified as an independent contractor.