No problem, I know whats wrong. Your contractor is inexperienced and in over their heads. You will need to get a real finish carpenter out there to fix what they have done.
These are the folks that give us a bad reputation, if they did not know what they where doing, they could have at the least gone to a library and taken out a book on stairs.
This is just not professional to do. I wish them the best, everyone needs to learn somehow, but this one should not charge you for it.
They are trying to get the 10 inch tread by code for each stair. But these stairs are nonconforming and can never be made to meet code. Each tread needs to be cut down so there is a 1 inch maximum overhang. And it is what it is when finished. Talk to your local building official for more information.
Let us know what you do.