This company will stay alive until someone drops a dime to the IRS, at which point they'll reclassify everyone as a W-2 employee and demand income tax and FICA withholding from the boss, with interest and penalties. Unless he's put a lot in the bank from his exploitation of you all, he's not going to be able pay this (pity that he's personally liable for this; whatever the corporate structure is, this pierces the corporate veil).
You want to get out before this happens or before the IRS figures it out in some other way.
When you give notice he will almost certainly threaten you; it would be by far the best to ignore it (don't escalate, who knows how crazy he might get, ADDED: and it's best to keep in reserve, e.g. see the next paragraph), but if you can't ignore it you could always say "Be grateful I'm not reporting you to the IRS...."
If he seriously threatens you WRT to your non-compete, point out his vulnerability WRT the IRS. Unless and until he converts his employees to W-2 status (and I suppose pays his back due withholding), he's exquisitely vulnerable there.
As some have noted, don't bother to sue. At best you'd receive a pittance, per the above you might end up trying trying to collect from a bankrupt company/the owner. What you really need is closure, getting away from this bad situation which is no doubt slowly poisoning your attitudes towards work, upper management, etc.