My question involves employment and labor law for the state of: Washington

I have worked for an in home daycare for several years. In 2013 they bought a new home and opened their licensed daycare there and had me move into their old home and get licensed to run an in-home daycare there. They constantly hold the daycare over my head and threaten to close it while on their power trips. Things blew up the other day and now she is telling people I am not an employee I have been on my maternity leave and work as a volunteering with getting paid to hold the license, and i don't have real tenant rights because I don't pay rent i'm considered a squatter"

Basic Details:
* I live in the home and hold the license for the business. They pay me a monthly amount to hold the business license ($100)

* There was no rental contract drawn up. The verbal agreement was I live in the home, license the daycare and I work to pay the mortgage and I need to pay half the monthly bills in cash out of what my husband brings home. The business will pay the other half of the bills. I pay her cash every two weeks for bills never received receipts so really I have no proof. I have text messages stating how much I owe them for bills but that's it.

* They allowed me a week and a half off for the birth of my daughter but I had to pay over $1000 to cover that time I would be gone.

*I work 6:30am - 6:30 pm Monday - Friday. No Lunch, no breaks. I am not paid anything other then the check to hold the business license.

* My husband lost his job and I applied for state benefits because I have three children to care for an neither of us bringing in income. They went completely irate on my saying we have had this conversation multiple times you are raising a red flag.You have a business license and no income from it. They have to now put me on payroll they are mad about that and paying the payroll tax. She wants me to know take a certain amount out of my state assistance food benefits to buy the daycare food to cover the cost of what the price of the payroll tax will be. They also want to write me the payroll check of $500, have me cash it and return the money to them. Just to show they are paying me and don't get in trouble! I don't want to be held liable for any of their schemes and I have a feeling I am being brought into it.

*This month other employees will receive a w2 for tax time she is going to 1099 me??? What does this mean and how can this effect me? My licensed daycare brings in approximately $9000 a month.

* I will be seeking legal advice in my town Monday, there is just so many things that I don't even know what to tell an attorney anymore.


Questions:

* What rights do I have and does she have when she is paying me to hold the license?

* Obviously they are breaking some type of law with the IRS they are saying they aren't but the way they want to handle the payroll situation make me wonder. So what laws are they breaking?

* What proof do I need to obtain that I have worked all this time and I am not a volunteer of any type?

* Do i have a leg to stand on in court with any of these things. Eviction is being threatened. I don't know what the laws are to protect me if I decided to pull my daycare license and they are the owners of the home. Today they came right through the front door during non-business hours and said they can because its a business.

I am fully aware the mistakes I have made by not having contracts and agreements. I am ready to walk away but want to be sure if I need proof I want to acquire it before I leave. They are the typical work place Bullies in every way shape and form. But bullying isn't illegal. I just have text messages of all the dirty schemes. Thanks for the help!