Class Code 5645 vs 5651 vs 5403: Why Your Carpentry Payroll Got Reclassified

Updated October 22, 2026 · TrueUpAudit

Residential or commercial? Three stories or four? Carpentry class codes turn on the building, not just the work. Here's how 5645, 5651, and 5403 differ and what to do if an audit moved your payroll.

Educational information only. Not insurance, legal, or consulting advice. TrueUpAudit is not an insurance agency or consultant. Rules differ by state and carrier. Always check your policy and your carrier's audit notice.

The short version

All three codes are carpentry, and the difference is mostly what kind of building the work is on, not what your crew physically does. In NCCI's system, carpentry on residential dwellings of three stories or less goes to 5645. Carpentry on commercial buildings, mixed-use buildings, and residential buildings taller than three stories goes to 5403 (Carpentry NOC). 5651 is an older "dwellings, three stories or less" code that many states have folded into 5645 but a few still use.

Rates for these codes can differ a lot, so an auditor moving payroll from one to another can change your bill by thousands of dollars. This guide explains the difference in plain English, why reclassification happens at audit, and how to check yours. (We paraphrase the code descriptions; the official wording lives in NCCI's Scopes manual and your state bureau's manual.)

How the three codes compare

A neighboring code, 5437 (cabinet installation and interior trim), is the one that most often gets pulled into these fights. We cover it below.

The height line and the "project" rule

Two ideas decide most cases.

1. Three stories

MEM, a workers' comp carrier, puts it simply: the number of stories matters, and an apartment building of three stories or less is still treated as residential. An apartment building taller than that moves to 5403, as does anything built for commercial or mixed use (MEM).

2. The whole project gets one code

Beacon Mutual explains the "project classification" concept: when a carpentry or general contractor's own employees do all the carpentry on a project, the work is classified by the project (5645 for a residential dwelling up to three stories, 5403 for taller residential or commercial), rather than by the type of carpentry each person does that day. That includes interior trim. NCCI extended this concept to non-residential work in a filing that Beacon applied to policies renewing from October 1, 2013 (Beacon Mutual class code alert).

The practical result: if you're the contractor responsible for the whole job, you generally can't carve out a cheaper "trim" or "cabinet" code for part of your own crew's payroll on that job.

Why contractors get reclassified at audit

NCCI runs a classification inspection program and publishes its most-reclassified codes. In its 2021-2023 data, code 5437 (cabinet and interior trim) made the top-ten list for the first time. More than a quarter of inspected policies with 5437 as the governing code were changed, and of those, over 30% moved to 5645. NCCI's stated reasons were that the trim work was being done by employees of a contractor responsible for building the entire home, or that the "repair" or remodel work actually included framing or structural work (NCCI Insights).

Common audit scenarios:

• "Trim carpenter" is really a general carpenter. You were written under 5437, but your crew frames, builds, and finishes. The auditor moves everything to 5645 or 5403.
• Remodel with structure. MEM notes that a remodel with no structural change, such as no framing and no change to the footprint, can be split into trades like drywall, trim, cabinets, and flooring. Once the work changes the structure, all those trades fall under the project code.
• Residential vs. commercial mix. A crew that builds houses and also does a commercial tenant buildout can have payroll in both 5645 and 5403, but only if your records separate it.
• Building height. A fourth-story townhouse or apartment project can push the whole job from 5645 to 5403.

A disagreement over exactly this has reached a state regulator: the Maine Bureau of Insurance has published a decision about whether a project was a residential 5645 job or a commercial 5403 job (Maine PFR). Your state's rules may differ, and some states carry their own exceptions to the national codes (NCCI's scopes list exceptions for California, Florida, Kentucky, Massachusetts, New Jersey, New York, Oregon, and Virginia, among others).

A worked example (made-up numbers)

Say a small contractor had $200,000 of carpentry payroll, written under a code with a rate of $9.00 per $100 of payroll, mod 1.00. The auditor moves $120,000 of it to a code with a rate of $14.00.

• Original: $200,000 ÷ 100 × 9.00 = $18,000
• After: $80,000 at 9.00 ($7,200) + $120,000 at 14.00 ($16,800) = $24,000
• Difference: $6,000 of added premium from a code change alone

Those rates are invented. Real rates vary by state, year, and carrier. The point is that a code change affects every dollar of payroll it touches, so the first thing to check is whether the new code truly describes your work.

How to check whether your reclassification is right

1. Find the code before and after

Compare the policy declarations page against the audit worksheet. Note each code, its payroll, and its rate.

2. Describe the work in one sentence per job

What was built, how many stories, who it was for, and whether your crew did framing or structural work. Auditors decide on facts like these, so have job files, contracts, permits, and photos ready.

3. Check your payroll separation

Travelers and other carriers say payroll can't be split across classes by estimate or percentage; you need records that show it (Travelers premium audit FAQ). If a legitimate commercial job and a residential job were tracked separately in your books, show that.

4. Check whether the project rule applies

Were you responsible for the entire project, or a specialty sub doing only cabinets and trim? Beacon says 5437 now applies only to specialty subcontractors who aren't responsible for the entire project and do cabinet and trim work only. If that's you, say so, with contracts.

5. Dispute in writing, line by line

State what the work was, which code you believe applies, and attach proof. Our dispute letter template walks through the structure, and how to dispute a workers' comp audit covers deadlines and escalation. Class disputes can also go to your state's rating bureau, so ask your carrier how that works in your state.

How to avoid a surprise next time

• Describe your work in detail at renewal: building types, heights, and whether you handle framing, trim, or both.
• Separate payroll by job type in your books if you really do both residential and commercial work.
• Keep job files: contracts, permits, and photos showing the building and scope.
• Mention subcontractors and keep their certificates, so your payroll isn't inflated by uninsured sub charges. See uninsured subcontractor charges.
• Ask before the audit if you take on a new type of project.