What Are the Texas Workers Compensation Requirements?

Texas Labor Code Chapter 406 does not require most private employers to carry workers compensation insurance. The exceptions are significant: Texas employers who perform work on state or local government contracts are required to provide workers comp for employees working on those projects under Texas Labor Code §406.096. Employers in the construction industry working on public projects must carry workers comp. Employers in certain regulated industries — including motor carrier operations under TxDMV authority — may face workers comp requirements through their operating licenses or contracts. Outside these categories, Texas private employers choose their path.

Employer Type	Workers Comp Required?	Consequence of Non-Compliance
Most private employers	No — optional	Must notify employees and TDI of non-subscriber status
Public works / government contractors	Yes — mandatory for project workers	Contract disqualification; statutory penalty
Construction on public projects	Yes — mandatory	Cannot bid or perform public construction without coverage
General contractors (private commercial)	Often contractually required	Subcontract disqualification; owner liability shift
Employers with federal contracts	Often required by federal contract terms	Federal contract default; Davis-Bacon compliance issues

What Happens When Texas Employers Choose Not to Subscribe?

Texas non-subscribers — employers who opt out of workers compensation — lose three critical statutory protections that subscribing employers receive. First, non-subscribers cannot use the “exclusive remedy” defense that bars injured employees from suing their employer in tort when workers comp covers the injury. Second, non-subscribers cannot use the defenses of contributory negligence (the employee was partly at fault), assumption of the risk (the employee knew the job was dangerous), or fellow servant rule (a co-worker caused the injury) — all three are abolished for non-subscribers under Texas Labor Code §406.033. Third, non-subscribers face uncapped punitive damages in addition to compensatory damages when gross negligence is proven.

The practical result: a Texas non-subscriber is essentially an uninsured defendant in any employee injury lawsuit, facing full compensatory damages, punitive damages for gross negligence, and no ability to reduce liability by pointing to the employee’s own fault or assumption of the job’s inherent risks. Texas plaintiff attorneys aggressively pursue non-subscriber employers because the statutory defense abolition makes these cases significantly easier to win than standard negligence suits.

Defense	Subscriber (has WC)	Non-Subscriber (no WC)
Exclusive remedy bar on civil suits	Yes — employee generally cannot sue	No — employee can sue freely in tort
Contributory negligence defense	N/A (exclusive remedy applies)	Abolished — cannot use
Assumption of the risk defense	N/A	Abolished — cannot use
Fellow servant rule defense	N/A	Abolished — cannot use
Punitive damages exposure	Insulated by exclusive remedy	Available against non-subscriber for gross negligence

What Does Texas Workers Compensation Insurance Cover for Subscribers?

Texas workers comp for subscribers covers medical treatment and lost wage replacement for work-related injuries, provides the exclusive remedy bar that prevents most civil suits, and includes employer’s liability (Part B) for the limited civil suits that break through the exclusivity barrier. Texas uses the NCCI class code and experience modification system for private carrier rating, and Texas subscriber employers with three or more years of payroll history qualify for experience modification. Lost wage benefits begin after a seven-day waiting period at 70 percent of the employee’s average weekly wage, with a maximum benefit tied to the state average weekly wage published by the TDI-DWC annually.

• Medical treatment through the Texas workers comp medical fee schedule for all authorized treating physicians, specialists, surgery, and hospitalization
• Temporary income benefits (TIBs) at 70 percent of average weekly wage after the seven-day waiting period, up to the state maximum weekly benefit
• Impairment income benefits (IIBs) for permanent impairment rated by an authorized treating physician using the AMA Guides
• Supplemental income benefits (SIBs) for employees with impairment ratings of 15 percent or more who demonstrate active job search efforts
• Lifetime income benefits (LIBs) for catastrophic injuries including total and permanent loss of sight, hearing, both feet, both hands, or paralysis
• Employer’s liability (Part B) protecting against the limited civil suits that bypass the exclusive remedy bar under Texas law
• Death benefits including burial expenses up to $10,000 and weekly income benefits to surviving spouses and dependents
• Return-to-work program coordination through the TDI-DWC’s return-to-work initiative, which provides financial incentives for employers who reintegrate injured workers

What Is Texas Non-Subscriber Occupational Accident Insurance?

Texas non-subscribers who choose to opt out of workers compensation but want to provide injury coverage for employees — and reduce their civil suit exposure — can purchase occupational accident insurance as an alternative. Occupational accident insurance is not workers compensation and does not provide the exclusive remedy bar, but it does pay medical benefits and income replacement for work-related injuries, demonstrating that the employer has provided some injury protection. Some Texas non-subscriber programs are structured as ERISA benefit plans under federal law, which can provide non-subscribers with certain preemption protections against state tort claims that straight occupational accident policies do not.

Texas non-subscriber occupational accident programs typically cover medical expenses, disability income, accidental death and dismemberment, and survivor benefits — but at defined benefit levels that may be lower than workers comp would pay, and without the exclusive remedy civil suit protection that workers comp provides. Texas non-subscriber employers who carry occupational accident insurance still face potential civil suit liability; the occupational accident policy does not eliminate that exposure.

Which Texas Industries Face the Greatest Workers Compensation Exposure?

Texas’s oil and gas extraction industry — concentrated in the Permian Basin (Midland/Odessa), Eagle Ford Shale (South Texas), and Barnett Shale (Fort Worth Basin) — generates some of the highest workers compensation class code rates in the state. Drilling, completion, pipeline construction, and well servicing operations involve high-pressure equipment, H2S exposure, heavy lifting, and vehicle accidents on rural lease roads where catastrophic injuries occur with meaningful frequency. Texas’s construction industry, particularly the high-volume residential and commercial construction markets in Dallas-Fort Worth, Houston, Austin, and San Antonio, generates fall, electrical, and equipment injury claims in a state where the non-subscriber choice creates consequential decisions for contractors who choose to opt out.

• Oil and gas extraction: Permian Basin, Eagle Ford, and Barnett Shale operations with drilling, completion, and pipeline construction exposure under high-rate class codes
• Construction: DFW, Houston, Austin, and San Antonio high-volume markets where non-subscriber choice and public project subscriber requirements create complex coverage decisions
• Agriculture: Texas farm, ranch, and livestock operations where tractor, irrigation, and livestock handling injuries generate significant worker injury exposure
• Manufacturing: Texas automotive assembly, food processing, chemical, and petrochemical operations along the Gulf Coast and in the Dallas-Fort Worth manufacturing corridor
• Transportation: Texas commercial trucking on I-10, I-35, I-20, and US-59 with driver injury and cargo handling frequency under high commercial auto and workers comp rates
• Healthcare: Texas hospital systems, clinics, and long-term care facilities with patient handling, needlestick, and workplace violence employee injury exposure

Texas Workers Compensation Class Codes and Premium Estimates

Industry / Class Code	Approx. TX Rate per $100 Payroll	$500K Payroll Estimate
Oil & gas drilling (6233)	$18–$30	$90,000–$150,000
Roofing (5551)	$20–$28	$100,000–$140,000
Concrete / masonry (5022)	$10–$16	$50,000–$80,000
Carpentry — residential (5645)	$9–$14	$45,000–$70,000
Landscaping (0042)	$7–$12	$35,000–$60,000
Clerical / office (8810)	$0.15–$0.25	$750–$1,250

Why Texas Businesses Choose The Allen Thomas Group for Workers Compensation

The Allen Thomas Group places Texas workers compensation for subscriber employers and occupational accident coverage for non-subscribers, accessing Travelers, Liberty Mutual, Hartford, Cincinnati Insurance, AmTrust, Employers, and additional carriers with Texas appetite. Texas’s subscriber vs. non-subscriber decision is one that The Allen Thomas Group advises on directly — the right answer depends on industry, employee count, payroll size, safety program quality, and risk tolerance. We help Texas employers understand the full cost of non-subscriber exposure before making the opt-out decision, and we structure coverage programs for both paths.

• Subscriber workers comp placement through 15-plus A-rated carriers with Texas appetite, including NCCI experience modification analysis and class code accuracy review
• Non-subscriber occupational accident program placement for Texas employers who choose to opt out and want structured injury coverage for employees
• Subscriber vs. non-subscriber cost analysis comparing the full cost of each path including civil suit exposure, occupational accident premiums, and workers comp subscriber premiums
• Public works contract compliance ensuring Texas contractors working on government projects carry the required workers comp subscriber coverage
• Oil and gas industry specialists placing workers comp for Permian Basin, Eagle Ford, and Barnett Shale employers under the state’s high-rate extraction industry class codes
• Annual renewal marketing 60 days before expiration comparing Texas carrier options rather than accepting incumbent subscriber rates without competitive evaluation

How to Get Workers Compensation Coverage in Texas

1. Decide subscriber vs. non-subscriber — evaluate your industry, employee count, safety program, and risk tolerance against the civil suit exposure non-subscriber status creates under Texas Labor Code §406.033
2. If subscribing: classify payroll by NCCI code — separate clerical, supervisory, and field labor payrolls for accurate class code rating under the Texas NCCI system
3. Provide three years of loss runs — Texas subscriber employers with qualifying payroll history receive NCCI experience modification; loss runs are required for underwriting
4. Confirm public project requirements — Texas employers bidding on public works must carry subscriber coverage for project employees under §406.096 before contract award
5. If non-subscribing: evaluate occupational accident coverage — contact The Allen Thomas Group to structure an occupational accident program that provides employee injury benefits while acknowledging the remaining civil suit exposure