Employees, subs, and the law: roofing hiring done right (US and Canada)

More than almost any other trade, roofing runs on subcontracted crews paid on a 1099, and that is precisely why roofing produces some of the ugliest retroactive tax and insurance bills in the contracting world. The paperwork that feels like a formality is the paperwork that becomes a lawsuit, an audit, or an uninsured fall. The rules differ sharply between the US and Canada, and roofing carries risks (fall exposure, one of the highest workers’-comp class codes there is, a workforce that often includes immigrant labor) that make getting this wrong more expensive here than in any other trade. Here’s what actually matters. (As always: a payroll service plus an employment lawyer for your jurisdiction are cheap next to the penalties, and these rules change, so verify the current version before you rely on it.)

Employee vs. contractor, the classification trap roofing walks into daily

Calling a full-time installer a “1099 sub” to skip payroll taxes, workers’ comp, and overtime is the single most common, and most expensive, mistake roofing companies make. It is also more tempting in roofing than anywhere else, because genuine subcontracted crews really are the norm. That blurs the line, and the tax authorities know it. The label on the invoice doesn’t decide it; the working relationship does. If you set the schedule, supply the dump trailer and the compressor, and the crew works only for you, they’re employees no matter what the 1099 says.

🇺🇸 US: an employee gets a W-2; a genuine independent contractor gets a 1099-NEC. The IRS looks at behavioral control, financial control, and the relationship; the US Department of Labor applies its own economic-reality test under the FLSA (that test has been rewritten more than once in recent years, confirm the current standard). Misclassify and you’re liable for back payroll taxes, unpaid overtime and minimum wage, penalties, and interest, and in roofing, the uninsured-injury exposure on top of it.

🇨🇦 Canada: an employee gets a T4; a self-employed contractor gets a T4A (there is no “1099” in Canada). The CRA applies its own control/tools/chance-of-profit/integration test. Misclassification is brutal: you can owe both the employer and employee shares of CPP and EI, unpaid income-tax withholding plus penalties and interest, unpaid WSIB/WCB premiums, plus Employment Standards back-pay, unpaid wages, overtime, vacation pay, statutory-holiday pay, and termination/severance.

Red flags that a “sub” is really an employee (any of these and you’re likely misclassified): you set their start time and which job they’re on; they run your equipment and materials, not their own; they work only for you with no other clients; you direct how the roof gets laid, not just the finished result; they wear your company shirt and are held out as your crew. A true subcontractor runs their own business, carries their own insurance, sets their own schedule, uses their own gear, and takes other clients. Rule of thumb: if you’d fire them for not showing up, they’re probably an employee. If it’s genuinely borderline, get a ruling, IRS Form SS-8 in the US, CRA Form CPT1 in Canada, instead of guessing.

If you do use real subs, protect yourself the way the wage-benchmarks guide lays out: get a certificate of insurance and proof of active workers’-comp/WCB coverage from every crew before they set foot on a roof, use a written subcontract, and don’t run subs on your schedule and equipment like staff.

Workers’ comp, roofing is one of the highest-risk, highest-premium classes there is

There is no trade where this section matters more. Roofing sits in the highest-hazard workers’-comp classifications, which means the highest premium rates per dollar of payroll, often multiples of what a plumber or electrician pays. That cost is exactly why shops are tempted to 1099 their way around it, and exactly why the boards audit roofing hard.

🇺🇸 US: workers’ comp is state-run and mandatory for employees in nearly every state (Texas is the notable outlier where private-sector coverage is optional, verify your state). Employers carry coverage through a private carrier or state fund; benefits typically run around two-thirds of average weekly wages. Whether owners/officers must cover themselves varies by state. Critically, in many states you can be assessed premium on uninsured subcontractors: if your “sub” can’t show their own coverage, the auditor treats their pay as your payroll and back-charges you. Roofing rates are high; an audit that reclassifies a season of subs is a company-ending number.

🇨🇦 Canada: provincial boards, WSIB (Ontario), WorkSafeBC, WCB (Alberta and others), CNESST (Quebec): funded by employer premiums, and roofing again sits in a high-rate class. It’s no-fault and the exclusive remedy (an injured worker who accepts benefits gives up the right to sue you), paying roughly 85-90% of net earnings. Coverage is generally mandatory once you have workers, and boards like WSIB have specific rules for construction, including situations where independent operators in construction must register themselves. Confirm your province’s current requirement.

OSHA fall protection, the obligation that defines the job

Roofing is among the deadliest common trades in North America, and falls are the leading cause. In the US, fall protection is OSHA’s single most-cited standard year after year, and roofing is a primary target of enforcement and local-emphasis programs.

🇺🇸 US: under OSHA (29 CFR 1926 Subpart M), employers must protect workers on most roofs from falls, generally at 6 feet in construction, using guardrails, safety nets, or personal fall-arrest systems (harness, lanyard, anchor). There are narrow provisions for low-slope work and residential exceptions with specific conditions; don’t rely on folklore about them, read the current standard. Penalties scale hard for willful and repeat violations, and a fatality brings an inspection you will not enjoy. State-plan states (California/Cal-OSHA, and others) may set stricter rules. This obligation follows the employment relationship: your workers are your responsibility to protect and train.

🇨🇦 Canada: fall protection is provincial occupational-health-and-safety law, and the trigger height is typically lower, often around 3 metres (roughly 10 feet), and lower in some provinces or on some work. Ontario additionally requires Working at Heights training from an approved provider before a worker on a construction project can use most fall-protection systems. Check your province’s OHS regulation and mandatory-training rules.

Two practical points: fall-protection duties don’t evaporate because you called someone a “sub”. Regulators look at who controls the site. And a serious injury to a misclassified worker with no comp coverage is the scenario that combines every liability in this guide at once.

Immigration and I-9, the exposure roofing can’t ignore

Roofing employs a large immigrant workforce, which makes work-authorization compliance a real, audited risk rather than a theoretical one.

🇺🇸 US: every employee must complete Form I-9 (employment eligibility verification, run by USCIS) at hire; many employers also use E-Verify, which some states mandate; check yours. Knowingly employing unauthorized workers, and paperwork violations on the I-9 itself, both carry escalating civil penalties, and worksite enforcement in construction is active. Note the trap: this duty attaches to employees, so misclassifying crews as subs does not make the problem disappear; it often makes it worse, because you’ve now got both a classification violation and a verification gap.

🇨🇦 Canada: employers must ensure workers are legally entitled to work (citizen, PR, or a valid work permit). Hiring foreign workers generally runs through the Temporary Foreign Worker Program / LMIA or an LMIA-exempt stream under IRCC, with employer compliance reviews. Keep documentation.

Overtime, vacation, stat holidays, and at-will

• 🇺🇸 Overtime is federal (FLSA, generally 1.5× over 40 hrs/week) plus any state rules; most roofing field workers are non-exempt and owed it. Vacation isn’t federally mandated. Almost every state is at-will, so you can end employment for any legal reason without notice. Montana is the exception (good cause required after a probationary period).
• 🇨🇦 Overtime thresholds, vacation pay (a percentage of wages), and statutory-holiday pay are all set provincially and are mandatory. Build them into your labor cost. And there is no at-will employment in Canada: terminating without cause requires written notice or pay in lieu (statutory ESA minimums plus often much longer common-law notice), and an at-will clause copied from a US template is void. Firing a Canadian worker on the spot without notice is how you end up owing months of pay.

Checklist

• Classify honestly. If a crew is managed like employees, they’re employees, W-2/1099-NEC (US) or T4/T4A (Canada). When unsure, get a ruling (IRS SS-8 / CRA CPT1) or ask your accountant.
• Never let an uninsured sub on a roof. Collect a COI + proof of active comp/WCB before day one, in many jurisdictions their pay becomes your premium otherwise.
• Carry workers’ comp and expect a high roofing rate; verify your state/province’s rule on covering owners and officers.
• Run real payroll (Gusto, ADP, Wagepoint, QuickBooks Payroll), withhold and remit on time; track hours and pay overtime.
• Fall protection is not optional: written program, the right anchors/harnesses on every roof, and required training (OSHA in the US; provincial OHS + Ontario Working at Heights in Canada).
• Verify work authorization: complete I-9 (and E-Verify where required) for every US hire; confirm legal-to-work status in Canada. Misclassifying does not excuse this.
• Every hire gets a written offer/contract; Canada, include a lawful, province-specific termination clause. Issue the Record of Employment (ROE) promptly on separation.
• Keep a standing relationship with an employment lawyer and payroll provider for your jurisdiction. Pair this with the hiring-and-running-crews guide and wage benchmarks.

The bottom line

Roofing’s economics push every owner toward 1099 crews, minimal comp, and speed, and that is exactly the combination the IRS, DOL, OSHA, CRA, and the comp boards are built to catch. The high workers’-comp rate is not a reason to skip coverage; it’s the reason the audit will hurt if you do. Classify honestly, insure every body on the roof, protect them from the fall, verify they can legally work, and put every hire and firing in writing with advice for your jurisdiction. It’s the least glamorous part of running a roofing company, and it’s the part that keeps the company yours.

General information for roofing business owners, not legal or tax advice. Employment, safety, tax, and immigration law vary by state/province and change, verify the current rules and consult an employment lawyer, safety professional, and payroll expert for your jurisdiction.