I quit the restoration shop.

Sounds like a case of covering his *** while hanging your *** out in the wind.
He's been saving a small fortune in Social Security taxes for you and screwing you in the process. You may think he's a great guy now, but when you have this huge hole in your work years when it comes time to retire he'll be a S.O.B.
I wouldn't hesitate to ask for unemployment, if he gets fined, then he should have been doing things legal. The kicker is, he's known since 2010 and kept working you illegally for the past 4 years. It's one thing to not know, but to continue after the fact, he needs to be busted.

I've been underpaid with the glimpse that the shop would eventually bring in more money. I'm not really on bad social terms with the owner, we've gotten along for as long as we have, but believe me, I know a bad business relationship when I can see it all. The prior shop that I worked for, the owner had me cleaning up the other two technician's botched flag time jobs on my weekends. I didn't see a day off, during my entire 8 month run with that guy and when I left, the last thing he told me before he sold the franchise back was that his shop was sunk without me.

It is closer than you realize. Most of the states show the MOU Signed: September 19, 2011 while Colorado shows MOU Signed: December 5, 2011 so the program was put together some time before then.

It's been illegal a long time running. The DOL only signed an MOU with each state based on the task force put in place, because it's been such a long running problem. The states that have signed on were targeted, due to their reports and back tax return reported.

I don't see why you didn't just list your garage as the place of business , as a 1099 sub -contractor you could show a separate business address from his shop , claim a couple of the cash side gigs you do to show other sources and carry on , heck you can even dedicate the sq footage in your garage shop and deduct as an expense as long as its dedicated space , as a builder/ carpenter I have been down this road a few times and learned claiming a couple of small jobs that only paid a couple of hundred bucks is worth a hell of a lot more than the tax saved by not claiming them in the long run .I'm glad to hear you were able to transition into a suitable plan B sounds like it's all working out .

I haven't done any work on the side that I can even claim. I have people who want to do business with me, but I have nothing to show, other than his 1099 as a source of income. Its the paper trail that they're flipping out over.

And the truth is, it would only excuse the BS. If I made more money, say I had other work coming to me and I made a decent living as a legitimate contracted worker or independent business owner, I wouldn't mind it so much, but knowing what I know about it now, there are more reasons for me not to perpetuate a problem, than to try and find a way around the law.