In hindsight, telling Sage has a very good outcome. She handles it very well and she confronts Chad and gives him the opportunity to tell her (she doesn't tell him what she knows). He still wimps out and denies there was anything.
So while Chad should be the one to tell her, he's not going to do it, and she absolutely deserves to know. And given that she handles it well and doesn't fly off the handle at him nor put him in a compromised position, it seems telling her is the best option.
Considering this situation had the chance to further escalate, with Sage going ballistic or Chad & Troy coming after the mc, it turned out fairly decent.