Texas is the only state where workers’ compensation is technically optional for private employers — but going without it (becoming a “non-subscriber”) leaves your business open to direct negligence lawsuits from injured employees. For most Texas businesses, workers’ comp is the smarter choice.
What is workers’ compensation?
Workers’ compensation pays medical expenses and a portion of lost wages for employees injured on the job. In return for these guaranteed benefits, employees give up the right to sue the employer for negligence- a trade-off known as the “exclusive remedy.” Non-subscribers in Texas lose that protection.
Why you need it:
- Required by most commercial leases, lenders, and large clients
- Protects the business from direct employee negligence lawsuits
- Covers medical, lost wages, rehab, and death benefits for work injuries
- Required for many job sites and government contracts
- Non-subscribers face unlimited liability and lose common-law defenses
What it typically covers:
- Medical care for the work-related injury or illness
- Wage replacement (typically around 70% of average weekly wage)
- Vocational rehabilitation
- Death benefits to dependents
- Employer’s liability protection
Frequently asked questions:
Is workers’ comp required in Texas?
Texas does not require most private employers to carry workers’ compensation, but specific industries (e.g., public construction projects) and most contracts do require it. Non-subscribers face significant legal exposure.
What does workers’ comp cost?
Premiums are based on payroll, industry classification code, and your experience modifier. Office work codes are inexpensive; construction and trucking codes can be 5–10x higher.
What happens if I don’t carry workers’ comp in Texas?
You become a non-subscriber. You must notify employees and the state, and you lose the common-law defenses that normally protect employers – meaning an injured employee can sue you directly with a lower bar.