Key Takeaways
- Texas is the only state where workers' compensation is NOT mandatory for private employers
- Employers who opt out are "non-subscribers" and lose certain legal protections
- Non-subscribers cannot use common law defenses like contributory negligence
- Texas Department of Insurance, Division of Workers' Compensation (DWC) regulates the system
- The State Office of Risk Management handles state employee claims
Texas Workers' Compensation Insurance
Texas has a unique workers' compensation system—it is the only state where coverage is NOT mandatory for private employers.
Voluntary System
Texas workers' compensation is voluntary for private employers:
Subscriber vs. Non-Subscriber
| Status | Description |
|---|---|
| Subscriber | Employer who carries workers' comp |
| Non-Subscriber | Employer who opts out |
Coverage Requirements
| Employer Type | Coverage Required |
|---|---|
| Private employers | Not required |
| State employees | Required |
| Counties | Required |
| Public schools | Required |
| Some contractors | May be required by contract |
Exam Tip: Texas is the ONLY state where private employers can legally opt out of workers' compensation.
Non-Subscriber Consequences
Employers who opt out face significant legal exposure:
Lost Defenses
Non-subscribers CANNOT use these defenses:
| Defense | Description |
|---|---|
| Contributory Negligence | Employee's own negligence |
| Assumption of Risk | Employee knew of danger |
| Fellow Servant Rule | Coworker caused injury |
Non-Subscriber Requirements
Non-subscribing employers must:
- File annual notice with DWC
- Post notice for employees
- Report injuries to DWC
- May be required to carry occupational accident insurance
Division of Workers' Compensation (DWC)
The DWC (under TDI) regulates workers' compensation:
DWC Functions
- Oversee workers' comp system
- Regulate claim disputes
- Certify self-insurance
- Monitor system compliance
- Administer Subsequent Injury Fund
Obtaining Coverage
Texas employers who choose to subscribe have options:
Coverage Options
| Option | Description |
|---|---|
| Private Insurance | Purchase from admitted insurer |
| Texas Mutual Insurance | State's largest WC insurer |
| Self-Insurance | Large employers may self-insure with DWC approval |
| Group Self-Insurance | Small employers can pool |
Texas Mutual Insurance Company
Texas Mutual is:
- Not government-run (unlike some state funds)
- Largest workers' comp carrier in Texas
- Competitive in the market
- Must accept all Texas employers (insurer of last resort)
Benefits for Subscribers
Workers' comp provides these benefits:
Benefit Types
| Benefit | Description |
|---|---|
| Medical Care | All reasonable medical treatment |
| Temporary Income Benefits (TIBs) | 70% of wages (first 104 weeks max) |
| Impairment Income Benefits (IIBs) | Based on impairment rating |
| Supplemental Income Benefits (SIBs) | Additional benefits if unable to work |
| Lifetime Income Benefits (LIBs) | Catastrophic injuries |
| Death Benefits | To dependents |
Benefit Calculations
- TIBs: 70% of pre-injury wages (up to state max)
- 7-day waiting period before income benefits
- Medical benefits have no limit
Rate Regulation
Texas uses file and use for workers' comp rates:
Rate Filing
- Insurers file rates with TDI
- Rates can be used upon filing
- Experience modification affects individual employer rates
- Loss-sensitive rating plans available
Is workers' compensation insurance mandatory for private employers in Texas?
What defense do Texas non-subscriber employers lose in employee injury lawsuits?