Different cities, different ways. For the last couple of years we've had a number of letters from certain cities to our clients regarding this. One city has no minimum and a little old lady who was a retired travel agent got the letter.
She still had contacts and got some tickets for friends through the system. She reported the money she took in less than the cost of the tickets. This left her with some small amount for gas and travel and whatnot. She had less than $400 taken in with over $300 in direct payments for the items "sold". She literally had less than $100 in income. The business license was reduced because of the small volume of business and she only had to pay $180 for it that year.
I'm not sure if her friends are no longer getting tickets or if she is just not telling us about the money, but her business license has not been renewed. I do have my suspicions as last year she came in with a hat from Barbados and she admitted she hadn't been there. IT HAD BEEN PURCHASED BY A FRIEND! Very suspicious. I'll be watching her very closely this year.
Info edit:
The employee, independant contractor arguement is entirely different and may or may not be true depending on the facts. The "employer" thinks she is an IC, hence a 1099. A W-2 is appropriate for an employee. This would be an entirely different question which would be much harder to fix and require permissions and approvals and many hoops. (Unless "employer" just agreed. Which I don't think he will.)
Sarcasm edit
I wouldn't call them anal, but I wouldn't stand between a politician and a dollar if I didn't want to get steamrolled.