Project Classification Workers Compenstion Code 5645, Code 5437 and Code 5403 – Associated Problems and Mistakes

Residential carpentry is a workers compensation class that includes many employers. And misunderstanding the relationship between residential carpentry construction not exceeding three stories in height 5645, interior carpentry 5437 and carpentry noc 5403 has caused problems for many employers over many years resulting in huge additional premium bills after audit. Employers and agents still have difficulty understanding how these codes interact with each other. Changes to how these codes can be applied to an employers operation has helped to clarify the situation. However confusion remains so let’s take a look at what’s going on with these project classification related codes.

Carpentry work typically falls into three distinct categories:

  • Rough Carpentry – which incorporates making and setting up wood concrete forms and temporary wood buildings and structures during the construction phase of a building project.
  • Framing Carpentry – constructing and setting walls both exterior and interior, adding roofs and other interior framing carpentry work.
  • Finish Carpentry – interior finish carpentry involves the installation of interior trim and door frames, doors and trim, cabinet installation and other interior finish work.

In the past confusion always surrounded the assignment of these classifications to an employer’s operations. Attempts were made to separate workers payroll from one class to another with hope that the overall premium paid by the employer would be less. With the advent of the project classification concept a great deal of consolidation between the use of these individual codes transpired. Reassignment of class codes by the rating organization (NCCI) has eliminated much of the confusion. However part of the problem remains in that some employers and insurance folks are still trying to split work process for a single employer between these codes.

Project classification can be best described as a consolidation of individual class codes under a more descriptive single code, a project code. It removes confusion and provides a more uniform treatment of risks. In the case of residential carpentry a consolidation of 5437 into 5645 applies when all carpentry work on a residential project is performed by the same contractor or general contractor if they are responsible for the entire project. The same now applies for 5403, which is the code that applies to residential carpentry exceeding three stories in height along with commercial buildings.

5437 or interior carpentry work now applies to specialty contractors who only perform interior trim work, including installation of cabinets, who perform no other carpentry work and who are not responsible for the complete construction project.

So if an employer has two separate carpentry crews, one who does framing work only and the other who does interior trim only and the employer has a project to build a two-story residence and finish the interior of that residence. All of his carpentry workers will fall under 5645. 5437 will not apply to this project.

Under some circumstances an employer may find that both codes can be on his policy. For example if my company normally builds two-story houses and I have two crews one which specializes in interior trim work. Another contractor hires my company to do the interior carpentry work on his project and we do nothing but interior trim on that job. My company would be acting as a specialty contractor for that job and my interior crew could be classed as 5437, but only for that job.

Confusing? Maybe. But when it comes to residential carpentry and using the right classification for your workers it pays to know how the rules will apply. The last thing you want to do is have your payroll split between classes only to find out at audit that it’s not allowed. A word to the wise, if someone tells you can use both codes, be careful. Watch out for project classification codes!

Hope this helps out and thanks for reading!

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