Workers Compensation in Texas

Workers Compensation in Texas: A Guide for Employers

Workers compensation insurance provides benefits to employees who are injured or become ill as a result of their job. Texas operates differently from most states, making it important for employers to understand their responsibilities and risk exposure. This guide explains how the Texas workers compensation system works, when coverage may be required, and what employers should consider when evaluating their options.

Is Workers Compensation Required in Texas?

Texas is the only state where most private employers are not legally required to carry workers compensation insurance.
However:
Certain government contractors must carry workers compensation coverage.
Some client contracts require proof of coverage.
Employers who choose not to carry coverage (known as non-subscribers) may face increased legal exposure.
Employers who do not carry workers compensation must report their status to the Texas Department of Insurance and notify employees accordingly.

What Does Workers Compensation Insurance Cover?

Workers compensation coverage may provide:

Medical Benefits

Covers medical care related to workplace injuries or occupational illnesses.

Income Benefits

Provides partial wage replacement if an employee cannot work due to injury.

Rehabilitation Benefits

May cover rehabilitation or therapy services.

Death Benefits

Provides benefits to eligible beneficiaries if a workplace injury results in death.

The Texas Department of Insurance, Division of Workers’ Compensation (DWC), oversees benefit administration and dispute resolution.

What Happens

What Happens If an Employer Does Not Carry Workers Compensation?

Employers who choose not to carry workers compensation coverage are known as non-subscribers.
Non-subscribing employers:
May lose certain legal protections in injury lawsuits.
May be sued directly by injured employees.
May face increased financial exposure in court.
Because Texas allows employers to opt out, businesses should carefully evaluate legal and financial risks before making that decision.

Who Oversees Workers Compensation in Texas?

The Texas Department of Insurance, Division of Workers’ Compensation (DWC), regulates the workers compensation system.
The DWC:
Oversees claims administration
Provides dispute resolution
Enforces compliance requirements
Offers employer and employee education
The per-occurrence limit represents the maximum payout for a single claim. The aggregate limit represents the maximum payout during the policy period.
Employers should understand reporting requirements and compliance obligations.

Workers Compensation Determined

How Workers Compensation Premiums Are Determined

For employers who carry workers compensation insurance, premiums are influenced by:
Industry classification
Payroll
Claims history
Workplace safety record
Higher-risk industries such as construction or manufacturing may have higher premiums due to increased injury exposure.