Is workers comp required in Texas?
Texas is the one state where most private employers may choose not to carry workers compensation, although many do and public-sector contracts usually require it. Owners, partners and corporate officers are treated under their own rules, and some workers such as certain agricultural or domestic employees may be handled differently.
Buying coverage in Texas
Texas employers that choose coverage buy it from private insurers or the state's competitive carrier, and the same class code and payroll rules apply as in other states. Employers that opt out should understand the legal trade-offs and often look at alternative injury benefit plans; many general contractors still require subcontractors to carry workers comp.
Who sets the rules
The Texas Department of Insurance, Division of Workers' Compensation oversees workers comp in Texas. In Texas, the National Council on Compensation Insurance (NCCI) provides the classification system and loss costs that insurers use to file rates.
What Texas employers should know
- Texas employers that opt out of the system are often called non-subscribers; they must notify the state and their employees and lose certain legal defenses in injury lawsuits.
- Many Texas general contractors require subcontractors to carry workers comp even though the state does not.
Texas facts employers ask about
Texas is the only state where most private employers may legally choose not to carry workers compensation. Employers that opt out are called non-subscribers. They must file a notice of non-coverage with the Texas Department of Insurance, Division of Workers' Compensation (DWC Form-005) each year and tell employees in writing and with workplace notices that the business does not carry coverage.
Opting out has consequences. A non-subscriber that is sued by an injured employee generally loses common-law defenses such as contributory negligence, assumption of risk and the negligence of a fellow employee. That is why many non-subscribers buy a separate occupational injury benefit plan and employers liability coverage instead.
Coverage is not optional everywhere: public employers must provide it, and contractors working on building or construction projects for a governmental entity must cover their employees. Texas Mutual Insurance Company, created by the legislature, competes with private insurers and also serves as the insurer of last resort, so businesses that want coverage can generally get it.
Sources: Texas Department of Insurance, Division of Workers' Compensation; Texas Labor Code, Chapter 406. Rules change; confirm current requirements with the agency before you rely on them.
How premiums are calculated
As in most states, TX premium is generally the class code rate per $100 of payroll, adjusted by any experience modification, credits and state charges. The final amount is confirmed by a payroll audit after the policy period. Learn more about how workers comp rates work and preparing for an audit.
Industry guides for Texas employers
Contractor workers comp
Workers comp for general contractors and trades like roofing, electrical, plumbing and painting.…
Trucking workers comp
Workers comp for trucking companies, owner-operator fleets and delivery operations: driver…
Restaurant workers comp
Workers comp for restaurants, cafes, bars and caterers. Burns, cuts and slips, tipped payroll,…
Texas workers comp FAQ
Is workers comp required in Texas?
Texas is the one state where most private employers may choose not to carry workers compensation, although many do and public-sector contracts usually require it. Rules and exceptions change, so confirm your situation with the state agency or an agent.
Who oversees workers comp in Texas?
The Texas Department of Insurance, Division of Workers' Compensation administers the workers compensation system in Texas.
Can I buy Texas workers comp from a private insurer?
Yes. Private insurers write workers comp in Texas, and most private employers may also choose not to carry it.
How is workers comp priced in Texas?
In Texas, the National Council on Compensation Insurance (NCCI) provides the classification system and loss costs that insurers use to file rates. As in most states, TX premium is generally the class code rate per $100 of payroll, adjusted by any experience modification, credits and state charges. The final amount is confirmed by a payroll audit after the policy period.