I own a small business. I do not currently employ anyone but was wanting to hire 2 college aged kids. We do outdoor recreation, soccer games. The kids would help me set up, referee the game and break down. Each might earn $300 to $400 a year tops. Can I treat them as a 1099 employee and pay them cash?

UNLESS you issue them W2s, they are NOT your regular EEs. While it is not illegal to pay them in cash, it's not a good business practice, for many reasons;
Cash payments made to them with whom you do business must still be substantiated if you want these cash payments to be deducted as expenses on your business tax return. Even small payments in cash should be paid through a petty cash fund , with appropriate documentation. The IRS requires that you must send a 1099-MISC to anyone whom you have paid $600 or more during a calendar year for freelance, contractual work or services.So you do not need to issue them 1099s.

What if you pay them less than $400 a year?