Rotted Sheathing Change Order and Worker Classification
A homeowner signs your standard contract for a $28,500 tear-off and re-roof of a 2,400-square-foot house: 40% deposit, balance due on substantial completion, 30-day written change-order clause, and a provision that all changes must be signed by both parties. During tear-off, the crew finds 32 sheets of rotted 7/16-inch OSB sheathing. The homeowner's adult son, who lives there but is not on the deed, tells the foreman by phone to 'go ahead and replace it.' The foreman texts a photo and the price-$120 per sheet, $3,840 total-but no signature. The crew installs the sheathing. At final walkthrough, the homeowner refuses to pay the $3,840, saying the roof was supposed to be complete for $28,500. Separately, your six-person crew is paid per square, uses your ladders and trucks, is scheduled by your foreman, and is required to attend Monday safety meetings. The owner calls them 'independent contractors' and issues 1099s.
1. Can you enforce the $3,840 sheathing charge? Analyze under the contract and agency principles.
Read the worked answer
The written contract requires all changes to be signed by both parties, so the son's phone approval and the foreman's text do not satisfy the change-order clause. The son is not a party to the contract and is not on the deed; living in the house does not by itself give him actual authority. Apparent authority might exist if the homeowner had previously held the son out to make decisions for this project, but that fact is not stated.
The contractor can argue unjust enrichment or quantum meruit because the homeowner received a roof with new sheathing and knew the work was being done, but the signed contract and change-order clause make that claim uncertain. Practical steps: document the condition with photos and daily reports, send a written invoice with the contract clause cited, offer to discuss, and preserve mechanic's lien rights within the deadline. Do not simply deduct the amount from the final bill without a legal basis.
2. What is the worker-classification risk, and what facts drive it?
Read the worked answer
The label 'independent contractor' does not control. The facts point toward employee status: the firm supplies ladders and trucks, the foreman schedules the crew, the workers must attend Monday safety meetings, and the firm supervises the work. Paying per square is a method of compensation and is common for employees in roofing. Under the right-to-control test, the firm likely directs the manner and means of the work.
Misclassification can trigger liability for workers' compensation, unemployment insurance, payroll withholding, and penalties. The firm should review the relationship with counsel or a CPA, reclassify the crew if the facts support employee status, obtain workers' compensation coverage, and use written employment agreements. The 1099 Forms alone will not protect the firm in an audit or after an injury.