Why the Formulas Work · Medium problem

A right triangle has legs $12$ and $16$. Fay finds the hypotenuse:

Step 1. $c = \sqrt{12^2 + 16^2}$ Step 2. $= \sqrt{144} + \sqrt{256}$ Step 3. $= 12 + 16 = 28$

Which step contains the first error? Answer with the step number.