Are There Penalties for not Having Workers' Compensation Insurance in Texas?

There are no consequences for failing to carry workers' compensation because it is not needed. However, there are administrative penalties for failing to prominently post the Notice of No Coverage to Employees.

Texas is the only state where coverage is optional. However, there are exceptions to this regulation for the following employers:

• Any government employer, including municipalities, counties, state agencies, and state colleges
• Public sector building and construction contractors
• Motorcoach operators and other motor carriers
• Distributors of combustible gasses, such as liquid propane and compressed natural gas

Employers who administer a work furlough program for prisoners

This offers employers multiple scenarios. They can "go bare," leaving them vulnerable to civil actions for personal injury based on common law, which can be brought by any misclassified employee or worker. This can lead to extremely expensive awards that are not limited by statutory levels, which might result in substantial economic loss for the employer. The employer is precluded from asserting certain legal defenses, such as contributory carelessness on the part of the worker or another employee or negligence on the part of a coworker.

Alternatively, the business may choose to voluntarily carry workers' compensation insurance for employees. When an employee is employed, he or she has five days to decide whether to maintain the common law right to sue for personal harm or to opt for workers' compensation coverage. If the employee opts for workers' compensation, the employer may get a benefit since the employee will receive benefits defined by the Workers' Compensation statutes and the Workers' Compensation Board and will be precluded from suing the employer under common law. Within five days, the employer must provide the employee with a Notice of Right to Select One Option or the Other. The Notice is published on the website for workers' compensation. Employers must provide this form to employees at the time of hire and receive a signed and dated copy of the employee's election.

A business or corporation may self-insure if it meets the necessary financial conditions. Additionally, they can self-insure through the State's Insurance Fund.

Employers who don't carry workers' compensation insurance are required to file Form DWC005, Notice of Non-coverage. Annually, this form must be filed by the end of April. This form and instructions are available on the Texas Department of Insurance's website, www.tdi.texas.gov. Visit the website for additional information.

In the instructions and laws, you are referred to as a nonsubscriber if you do not have workers' compensation insurance. You must still record workplace injuries and illnesses if you have five or more workers. On the Texas Department of Labor website, you may find the forms, directions, tutorials, and other helpful information.