Short answer: Usually not. Texas lets most private employers choose whether to carry workers' compensation, according to the Texas Department of Insurance, Division of Workers' Compensation. Employers who opt out, called non-subscribers, must report that to the state, notify employees in writing, and can be sued for workplace injuries without several traditional defenses.
Coverage is a choice for most private employers
The Texas Department of Insurance employer resources page says it directly: private employers in Texas can choose to carry workers' compensation insurance, but it is not required in most cases. Public employers are covered by statute, and certain government construction contracts require contractors to carry coverage, so read any public-works contract before assuming you can opt out.
What a non-subscriber must do
Opting out comes with paperwork. Under DWC rules, a non-subscriber with non-exempt employees must:
- File DWC Form-005, the non-subscriber notice, within 30 days of hiring its first employee, within 10 days after coverage ends, and each year between February 1 and April 30.
- Give each new employee written notice that the business has no workers' comp coverage.
- Post Notice 5 where employees can readily see it.
- Report to DWC any work-related injury that causes more than one day of lost time, plus occupational illnesses and deaths.
Employers whose only workers are exempt, such as certain domestic, farm and ranch workers, don't file the Form-005.
The lawsuit trade-off
The bigger issue is liability. Under Texas Labor Code §406.033, an injured employee of a non-subscriber can sue for negligence, and the employer can't defend by arguing that the worker was contributorily negligent, assumed the risk, or was hurt by a co-worker's negligence. A waiver signed before an injury is void. TDI notes that a workers' comp policy, by contrast, limits an employer's exposure to those lawsuits except in fatal gross-negligence cases.
Options between "full coverage" and "nothing"
Some non-subscribers buy occupational injury or employer liability policies designed for that market. These are not workers' comp, don't restore the lost defenses, and vary widely in what they pay. Compare them carefully against a standard Texas workers' compensation policy before deciding.
Bottom line
Texas gives you a choice, but non-subscribing has filing duties and real lawsuit exposure. Price a workers' comp policy and an alternative side by side. See our workers' compensation insurance overview.
Questions? Contact Alishahi Insurance or call (877) 711-4545. See insurance in Texas.
Frequently asked questions
Is workers' comp mandatory in Texas?
For most private employers, no. Texas lets them choose; public employers and some government contractors must have coverage.
What is a non-subscriber in Texas?
A private employer that has chosen not to carry workers' compensation insurance. It must file DWC Form-005 and notify employees.
When is DWC Form-005 due?
Within 30 days of hiring the first employee, within 10 days after coverage ends, and annually between February 1 and April 30.
Can employees sue a Texas non-subscriber?
Yes. They can sue for negligence, and the employer cannot use contributory negligence, assumption of risk or fellow-employee negligence as defenses.
Is an occupational injury policy the same as workers' comp?
No. It is a separate product that does not restore the defenses a workers' comp policy provides.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.