I did this for decades, and frequently hired everything from skilled carpenters to nearly clueless helpers, and paid them cash, by the day. That said, I got really lucky, since any issue involving this transaction, from paying cash, to not having legitimate workman's comp. insurance, can come back and bite you in varying degrees, from paying a small fine (in my case it was for a guy who filed unemployment against me) to total personal financial devastation in the event of a serious, or fatal accident, involving your day laborers. Sorry I do not have a better answer for you. My past experience is pretty much SOP for this area, and it can work very well, or be a disaster, depending on how it goes.
One of the great reliefs of no longer being in your shoes is getting out from under the liability issues. As the years went by, in my region, less and less legitimate contractors had legitimately paid and insured help. It didn't matter if it was subs with help that was illegally classified as independent contractors, or subs that only had liability and no worker's comp. The vast majority of those on my jobs represented a huge risk to me personally, and a serious accident, or fatality, would of lead the ambulance chasers in search of the deepest pockets, which were without a doubt mine. Good luck.
