Does Texas require workers’ compensation insurance?
No, for most private employers. Texas Labor Code 406.002 lets a private employer choose whether to carry workers' compensation. But public employers must cover their workers, contractors on government building projects must certify coverage (406.096), and an employer that opts out becomes a non-subscriber: it loses key defenses if an injured worker sues, and it must file an annual notice with the Texas Division of Workers' Compensation and post notices at work.
Updated . Written by Andre Beukers, principal at Redoubt, a commercial insurance agency in Salt Lake City, not a government office.
Does Texas require private employers to carry workers' comp?
No head count triggers a requirement in Texas. Labor Code 406.002 makes coverage elective: except for public employers and as otherwise provided by law, an employer may elect to obtain it. The main exception is public construction. Under 406.096, the state, a city, or another political subdivision that signs a building or construction contract must have the contractor certify coverage for every employee on the project.
A contract can require it even when the law does not. TDI's workers' compensation guide notes that some contractors require their subcontractors and independent contractors to carry it, and a hiring contractor or customer will usually ask for a certificate before work starts.
Source: Texas Labor Code 406.002, checked .
Are Texas owners and officers covered when the business buys a policy?
Because coverage is a choice, Texas has no owner exemption to file. Once a business buys a policy, its sole proprietors, partners, and corporate executive officers are covered as employees unless the policy specifically excludes them by endorsement (Labor Code 406.097). Sole proprietors, partners, and officers owning at least 25 percent can be excluded even on a public project. Domestic workers, casual workers at a personal residence, and most farm and ranch employees are outside the Act (406.091).
Watch the general contractor rule. Under Labor Code 406.123, a general contractor that carries coverage and hires a subcontractor with no employees is treated as that sub's employer for workers' comp, so the sub's pay can land on the general contractor's policy unless the paperwork says otherwise.
Source: Texas Labor Code 406.097, checked .
What does a Texas employer give up by going without coverage?
Texas does not fine a private employer for opting out. The cost arrives when someone is hurt: in an injury lawsuit against a non-subscriber, it is not a defense that the employee was contributorily negligent, assumed the risk, or was injured by a co-worker's negligence (Labor Code 406.033). The employee still has to prove the employer was negligent, and the employer can still defend on the ground that the injury was intentional or the employee was intoxicated.
The notice rules carry their own penalties. Skipping the annual notice to DWC (406.004) or the workplace and new-hire notices (406.005) is an administrative violation, and Labor Code 415.021 caps the penalty at $25,000 per day per occurrence. A non-subscriber also cannot have employees sign away the right to sue before an injury; 406.033 voids those agreements.
Source: Texas Labor Code 406.033, checked .
Who enforces workers' comp in Texas?
The Texas Department of Insurance's Division of Workers' Compensation (DWC) regulates the system. It receives the non-subscriber notices, runs the public coverage lookup, resolves injured workers' claim disputes, and assesses administrative penalties under Labor Code Chapter 415.
Source: TDI, Workers' compensation insurance guide, checked .
Where do Texas employers buy coverage?
Employers that choose coverage buy it from an insurer licensed by the Texas Department of Insurance. Texas Mutual Insurance Company, created by the Legislature as the Texas Workers' Compensation Insurance Fund, competes with private carriers and is the insurer of last resort under Insurance Code 2054.351: it may not turn away an employer that tenders the premium, though it can charge a higher premium for a risk its underwriting would reject.
DWC's employer FAQ lists two other routes for larger employers: certification as a self-insurer, and membership in a self-insurance group under Labor Code Chapter 407A.
Source: Texas Insurance Code 2054.351, checked .
Who sets the class codes and rates in Texas?
Texas classifications are set by the Texas Department of Insurance, and every carrier must use them (Insurance Code 2053.051); TDI's rate guide notes they can differ significantly from other states' codes. NCCI files the advisory loss cost for each class as an advisory organization to TDI. Each carrier multiplies it by its own filed multiplier, then applies the employer's experience mod.
Source: TDI, Texas Workers' Compensation Rate Guide, checked .
What does a Texas employer without coverage have to file?
Three notices, under Labor Code 406.004 and 406.005. A non-subscriber files a notice of no coverage with DWC every year between February 1 and April 30, and again after ending a policy. It posts a notice of no coverage where employees will see it, in English, Spanish, and other languages as needed. And it tells each new hire in writing that they are not covered.
TDI's employer forms page lists the notice to the Division as DWC Form-005 (Form-005S in Spanish), and DWC's Employer E-File takes it online from the employer or its agent. The workplace poster is DWC Notice 5. A non-subscriber with five or more employees also reports injuries with more than one day of lost time on DWC Form-007.
Source: TDI, Non-subscriber information, checked .
Deciding whether to carry workers' comp in Texas
Tell Redoubt what the business does, who works in it, and whether a public contract, a general contractor, or a customer is asking for a certificate. We will walk through what a policy or staying a non-subscriber means for that setup.
This is general insurance information, not legal advice or a coverage determination. Statutes, agency instructions, policy forms, and the facts of the business control.
Workers’ comp requirements in every state
Each state page gives the employee threshold, the owner and officer exemptions, the penalty for going without, the rating bureau, the market, the enforcing agency, and the exemption filing, each with its statute or agency source.
- Alabama
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- Maine
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- West Virginia
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The hub, and the Texas pages that go deeper
Texas workers’ comp FAQ
Is workers' comp mandatory in Texas?+
Not for most private employers. Texas Labor Code 406.002 makes it elective except for public employers and where another law requires it, such as government building and construction contracts under 406.096. A general contractor or customer can still require it in the contract.
What is a non-subscriber in Texas?+
DWC's term for an employer that chooses not to provide coverage, including one whose policy has ended. It files an annual notice, posts a notice of no coverage, tells new hires in writing, and cannot use the contributory negligence, assumed risk, or co-worker negligence defenses if an injured employee sues.
Do subcontractors on a Texas public project need workers' comp?+
Yes. Under Labor Code 406.096 each subcontractor on a public building or construction project gives the general contractor a certificate of coverage for its employees, which goes to the government entity. A general contractor and subcontractor can instead agree in writing that the general contractor provides the coverage (406.123).
Does an occupational accident policy count as workers' comp in Texas?+
No. The Texas Department of Insurance says alternative policies and coverage from unlicensed companies are not workers' compensation under state law. An employer that buys one is still a non-subscriber, with the same notice duties and the same lost defenses in injury lawsuits.