Roofing Misclassification: When a Class-Code Shortcut Becomes Fraud
Two Massachusetts roofers were indicted this summer for booking roofing crews as siding workers and painters. The premium gap that tempted them runs six figures on a single job, and the audit finds it.
Reclassifying roofing work into lower-rated trades like siding or painting is premium fraud, not a paperwork shortcut. A Massachusetts owner who booked roofing crews as siding workers and painters allegedly evaded roughly $20,194 in premium (Mass. AGO, June 2026). A separate Quincy roofer avoided about $584,962. On $500,000 of payroll, the roofing-versus-exterior rate gap alone can run $100,000 before your mod is even applied.
A class code isn't a formality. It's a price. And when a roofing crew gets booked as siding workers or painters, someone is quietly buying the cheaper price for the more dangerous work.
Massachusetts just showed what that costs when it's caught. On June 25, 2026, a Worcester grand jury indicted Milford contractor Edwin Santiago Bueno on four counts of workers' compensation insurance fraud and larceny. The allegation: between June 2020 and May 2023, his crews performed roofing while he classified the subcontractors as siding workers or painters to dodge the higher rate (Mass. AGO, June 2026). The estimated premium he avoided was about $20,194, owed to Ace American Insurance Company, administered by Travelers. The case surfaced only because Travelers flagged it to the state's Insurance Fraud Bureau during an audit.
The same week, the AGO indicted Quincy's The Roof Kings and its owner on four fraud counts each. Investigators tied more than $1.5 million in undisclosed payroll running through company accounts between 2018 and 2024 to roughly $584,962 in avoided premium (Mass. AGO / IFB, June 2026). Different scheme, same lever: pay the wrong price for the work.
Massachusetts isn't the Southeast. But roofing is roofing, and the NCCI (National Council on Compensation Insurance) classification logic that priced these accounts is the same logic pricing yours. This is a cautionary map, not a distant headline.
Why roofing misclassification workers comp cases keep landing here
Roofing sits near the top of the manual-rate table because crews fall off buildings. Exterior trades that stay closer to the ground, siding, painting, general carpentry, are priced at a fraction of it. The temptation isn't subtle. It's the widest rate gap on a residential exterior job.
Walk one job. Say a contractor runs $500,000 of payroll through a roofing operation. Booked at a roofing rate around $30 per $100 of payroll, that's $150,000 of manual premium. Booked at an exterior-trade rate near $10, it's $50,000. The shortcut buys a $100,000 discount on a single year's payroll, before the experience modification rate (EMR, or the mod) touches it. That's the money on the table, and it's why these cases exist.
The problem is that the discount isn't real. It's a loan against an audit.
The bill arrives three ways
First, audit additional premium. Carriers reconcile estimated payroll against actual work at year end. When the auditor reclassifies siding payroll back to roofing, the additional premium lands retroactively, often across multiple policy years at once. Ask The Roof Kings how a 2018 decision felt in 2024.
Second, fraud exposure. What starts as a classification disagreement becomes a criminal file the moment the state decides the misclassification was knowing. In both Massachusetts cases the charge wasn't a billing dispute. It was larceny.
Third, bid distortion. A contractor buying roofing coverage at a siding price can underbid the honest shop down the street on every exterior job. In our reviews of Southeast contractor worksheets, this is the pattern brokers miss most often: the misclassified account looks like a pricing genius until the audit reclassifies it and the reserves reprice the mod.
Clean paper, wrong price
Here's the trap for the honest contractor. Misclassification doesn't only happen on purpose. A subcontractor certificate can read clean, the scope of work can say "exterior," and the payroll can still be sitting in the wrong class because nobody reconciled what the crew actually did on the roof against how the policy priced them. A certificate proves coverage exists. It doesn't prove the coverage is priced for the work.
That gap between the paper and the payroll is exactly where an audit lives.
What an audit would check
An audit checks whether the class codes on your worksheet match the work your crews actually performed, not the work the policy assumed. It reconciles subcontractor payroll and scope-of-work records against the classifications the carrier applied, and it looks at whether reclassified payroll from a prior year is quietly inflating your mod today. Most contractors we review have at least one class code carrying payroll it shouldn't. On a roofing account, that single misfit is rarely a rounding error.
A clean worksheet won't lower the roofing rate. It can make sure you're paying the rate for the work you actually do, and not the penalty for a shortcut you never chose. Send us your NCCI worksheet and we'll review it before your next audit.