Opting Out of Workers’ Compensation in Texas
Texas is unique when it comes to workers’ compensation laws. Unlike most states, Texas does not require all employers to carry workers’ comp coverage. This raises an important question: can businesses and employees opt out of workers’ compensation? The answer depends on the role—employer or worker—and the choices they make.
Employers Can Opt Out
In Texas, employers are not legally required to provide workers’ compensation insurance. Those who choose not to carry it are known as non-subscribers. Non-subscribers must notify the state and their employees of their decision to opt out. While this saves the employer money on premiums, it also increases their legal risk. If an employee is injured, the employer can be sued for damages and lose certain legal protections normally provided under workers’ comp.
Employees Cannot Opt Out if Covered
For employees, the rules are different. If an employer carries workers’ compensation, employees are automatically covered and cannot opt out individually. Workers’ comp provides medical care, wage replacement, and disability benefits for job-related injuries, regardless of fault. Employees must follow the claims process through the Texas workers’ comp system.
Risks of Being a Non-Subscriber
Employers who opt out face greater liability exposure. If a worker is injured, the employee can file a lawsuit seeking full compensation for medical expenses, lost wages, pain, and suffering. In these cases, the employer cannot use certain defenses—like arguing the injury was partly the worker’s fault—that would normally be available under workers’ comp protections. For workers, the absence of coverage can mean delays or difficulties in getting medical bills paid.
Alternatives for Employers and Workers
Non-subscriber employers may choose to offer alternative benefits, such as occupational accident insurance, to provide some protection for employees. However, these plans are not the same as workers’ comp and may come with coverage limits. For employees working under non-subscribers, it is crucial to understand what benefits are available and what rights they have in case of injury.
Conclusion
Yes, employers in Texas can opt out of workers’ compensation, but doing so carries significant risks. Employees, however, cannot opt out if their employer provides coverage. Understanding how the system works helps both businesses and workers protect their rights and prepare for unexpected workplace injuries.
