Are Employers in Texas Required to Have Workers’ Comp Insurance?

Texas is unique because private employers can opt out of the traditional workers’ compensation system. That raises the question: does Texas require workers’ comp? Though employers can avoid the requirement for standard coverage, it is essential to understand the possible effects an employer’s decision may have on employees and businesses. The Law Offices of Aaron Allison understand that this is confusing and complicated. Whether you’re an employer desiring to protect your business or an injured employee who seeks clarity and guidance, we stand prepared to support you through this process. 

Are employers in the state of Texas required to carry workers comp insurance? In this video, Austin Workers Comp Attorney Aaron Allison explains. For more information, call (512) 474-8346.

Video Transcription:

Texas is the only state in the Union which doesn’t require employers to have real workers comp insurance. About 47% of all Texas employers now are non-subscribers to workers comp, meaning that they’ve opted out of the workers comp system. They haven’t paid the premium for a legitimate worker’s comp insurance and they’re called nonsubscribers and the law is very different in how it affects them as it does the subscribing employer. A list of some of the non subscribing employers in Texas is Walmart, Target, Home Depot, Lowe’s, any of the large retailers in Texas, the vast majority of them are now nonsubscribers. Hospitals, nursing homes, hospice care, the vast majority of them are non-subscribers to workers comp. Now, if you’re injured on the job for non-subscribing employer, most of the non subscribing employers will have what’s called an injured employee plan. It’s a type of insurance that they buy and it looks very much like and operates very much like real workers comp insurance. The injured worker has a limited period of time to notify the employer of the injury on the job, the employer will pay a percentage of their lost wages to them and will provide medical attention or pay the cost, medical costs for them. Now, those employers, for nonsubscribers, they own those injured employee plans, they fund them and they administer them, so they have a lot of control over those plans and a lot of times their disputes and/or denials for medical services or lost wages to the injured worker under those plans. For more information, go to AaronAllisonLawFirm.com.

Understanding Workers’ Compensation

Workers’ compensation is a state-regulated insurance program that provides financial and medical benefits to employees for work-related injuries and illnesses. It may also include everything from medical expenses and lost wages during recovery, rehabilitation costs to get them back to work, or even death or burial expenses for the worker’s family in worst-case scenarios. The no-fault nature of this system is perhaps its most remarkable feature. Workers do not have to prove that their employer was liable for the injury to receive benefits. The process is much quicker and less adversarial; hence, the employee is supported when in need without the burden of a protracted legal battle.

Sometimes, workers’ compensation is said to be incomplete. Injuries accrued during a state of intoxication from drugs or alcohol, horseplay, gross misconduct, or with the intent to violate workplace safety rules are considered non-compensable injuries. At the same time, some states have exclusions or qualifications dictated by the nature of employment or environment in which an injury occurred.

It has equal benefits to employers as part of workers’ compensation. A valid workers’ comp policy provides legal immunity, as employees cannot sue their employer for any injury or illness due to or during their work. It includes balance, wherein employees will receive the protection they need. At the same time, their employers are shielded against abusive claims and litigation, providing a shared opportunity to guarantee workplace safety. 

What Does This Mean for Workers and Businesses?

Under Texas state law, private employers can forgo the workers’ compensation program and become “nonsubscribers.” As per Texas Law Help, nonsubscribing companies are not obliged to adhere to the same rules as subscribing companies. Some large corporations that have gone this way include Walmart, Home Depot, and Lowe’s. Many nonsubscribers also put in private occupational injury plans instead of traditional coverage. But these plans vary quite a bit: 

• Employers Control Private Injury Plans: Unlike state-regulated workers’ compensation systems, private injury plans are fully designed and controlled by employers, offering flexibility. These plans can include medical coverage, wage replacement, or rehabilitation services tailored to the employer’s needs. However, the terms can vary widely, leaving employees without the consistent protection and benefits offered by state-regulated workers’ compensation, which may lead to gaps in coverage or support during recovery. 
• Fewer Legal Protections for Employers: Employers who opt out of state workers’ compensation systems or nonsubscribers relinquish some legal protections. Injured employees can sue for negligence, a liability not possible under traditional systems. Without this protection, employers would be vulnerable to suits and financial liability if workplace safety is not adequately maintained. Relatively minor lapses in safety can lead to serious legal and economic problems.
• Stricter Rules for Employees: Generally speaking, private injury plans have far more stringent qualifications that need to be met to pay benefits. Rules can include tight incident reporting deadlines, like 24 hours, or utilizing network medical providers. Failure to follow requirements may result in denied benefits, further stressing an employee’s already highly focused recovery process.

Carrying workers’ compensation insurance offers stability and legal protection for subscribing employers. For employees, it provides a reliable safety net after a workplace injury. Understanding your rights and obligations under Texas law is vital, so consulting a knowledgeable lawyer can make all the difference.

Contact The Law Offices of Aaron Allison for Help with Your Workers’ Comp Claim

Texas workplace injuries are complex and usually confusing. Sometimes, depending on a variety of choices made by your employer, the rules drastically change. Whatever the case may be, you don’t have to go it alone, be it a subscribing or a non-subscribing employer. The team at The Law Offices of Aaron Allison stands with our clients to make sure that proper legal representation gets them all the benefits due to them. Contact us today for a personal consultation if you have been injured at work. We will help you explore your options and fight for compensation.

Aron Allison, Attorney

For 50 years, my father, served as a trial lawyer to get just compensation for the people of Austin. At age 14, I began to take up the mantle to continue my father’s practice as a second generation trial lawyer serving Austin’s community. The strength of his legacy continues through its commitments to a communal presence, honoring that each case is as unique as the individual pursuing compensation.

Linkedin Profile: Aaron Allison

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