How Does Texas Worker’s Comp Non-Subscriber Work?

If you’ve been injured at work, the process of getting compensated can be challenging—especially if your employer has opted out of the Texas workers’ compensation system. Unlike most states, Texas allows businesses to opt out of state-mandated workers’ comp coverage, becoming what is known as a non-subscriber.

While this choice might help employers save on insurance costs, it can leave injured employees vulnerable when seeking fair compensation. According to Legal Clarity, non-subscribers face full liability for workplace injuries caused by their negligence, which means injured workers may have the right to file a lawsuit.

At Armstrong Lee & Baker LLP, we help injured workers in Houston, TX, navigate non-subscriber claims and fight for the compensation they deserve.

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What Is a Texas Worker’s Comp Non-Subscriber?

In Texas, a non-subscriber is an employer who chooses not to participate in the state’s workers’ compensation insurance program. While this option gives businesses more flexibility in handling workplace injuries, it also removes specific legal protections they would otherwise have under state law.

Key Features of Non-Subscriber Status:

• Limited Legal Protections:
  Employers who opt out lose immunity from personal injury lawsuits. If their negligence causes a workplace injury, they can be held fully liable for damages.
• Different Compensation Process:
  Injured employees must seek compensation through personal injury lawsuits or negotiate directly with their employer rather than receiving automatic benefits from the state system.
• Notice Requirements:
  Employers must notify the Texas Department of Workers’ Compensation (DWC) by filing Form DWC-005 and inform employees of their non-subscriber status at the time of hiring and after an injury occurs.
• Contingency-Based Claims:
  Most legal claims against non-subscriber employers are handled on a contingency fee basis, meaning employees only pay legal fees if their claim is successful.
• Comparative Negligence:
  Texas follows a modified comparative negligence rule, meaning an employee’s compensation may be reduced if they are partially responsible for the injury. However, the employer’s negligence—even if minor—can still justify a lawsuit.

Non-subscribers often create their own injury compensation policies to tailor benefits to their business model, but since these plans aren’t state-regulated, coverage can vary widely..

Why Do Companies Opt Out?

Employers often opt out of Texas’s workers’ compensation program for financial or administrative reasons. According to the Non-Subscriber Alliance, around 44% of private employers in Texas are non-subscribers, affecting nearly 20% of the workforce.

Here are common reasons why companies choose to opt out:

1. Cost Savings

Workers’ compensation insurance can be expensive, especially for businesses in high-risk industries. By becoming a non-subscriber, employers can reduce insurance costs and reallocate resources elsewhere.

2. Customized Benefits

Non-subscribers can design their own injury compensation policies rather than follow state-mandated guidelines. This allows businesses to tailor benefits based on job roles, risk factors, and financial capability.

3. Increased Control Over Claims

Non-subscriber employers have the flexibility to manage claims internally, which allows them to investigate incidents directly and resolve disputes faster than through state-administered systems.

4. Faster Claims Process

Opting out enables companies to streamline the claims process, avoiding delays often associated with Texas’s state workers’ compensation program.

However, this decision carries significant legal risks. Non-subscriber employers can be sued for workplace injuries, and if found negligent, they may face higher payouts than under the state’s workers’ comp system.

Notice of No Coverage

Texas law imposes strict notification requirements on non-subscriber employers to ensure transparency. According to Texas Administrative Code § 110.103, failing to comply with these notice obligations can result in legal penalties and increased liability.

Notice of No Coverage to Employees

Non-subscriber employers are required to provide written notice to employees regarding their decision not to participate in the state’s workers’ compensation program. This notice must be provided:

• At the time of hiring: Employees must be informed of the company’s non-subscriber status before they begin working.
• Through visible workplace postings: Notices must be displayed prominently in common areas, such as break rooms or HR offices.
• When an injury occurs: Employees should be reminded of their rights and the non-subscriber status when reporting an injury.

This transparency ensures that employees are aware of their rights and how to seek compensation for work-related injuries.

Notice of No Coverage to DWC

Employers who opt out of the Texas workers’ comp system must file Form DWC-005 annually with the Texas Department of Workers’ Compensation (DWC). This form serves as the official declaration of their non-subscriber status and includes:

• The employer’s contact information
• The date of non-coverage
• The reason for opting out

Failure to file this form can result in regulatory fines and weaken the employer’s defense in future workplace injury lawsuits.

Notice of Non-Covered Employer Report of Injury, Illness, or Fatality

Even non-subscriber employers must report workplace injuries, illnesses, and fatalities to the DWC:

• Fatalities: Must be reported within five days of the incident.
• Injuries or illnesses: Must be reported within seven days of becoming aware of the injury or diagnosis.

Non-compliance with these reporting requirements can lead to financial penalties and legal complications during injury claims.

What Types of Injuries Do Non-Subscribers Cover?

Non-subscriber employers are not bound by state-mandated coverage guidelines, which means the level of compensation and types of injuries covered can vary widely from employer to employer.

Common workplace injuries covered by non-subscriber plans include:

1. Slip-and-Fall Accidents

These injuries occur when employees fall due to hazardous conditions such as wet floors or poorly maintained walkways. Compensation often includes medical expenses and lost wages.

2. Repetitive Stress Injuries

Injuries like carpal tunnel syndrome or back problems caused by repetitive tasks can lead to coverage for physical therapy, time off work, and rehabilitation.

3. Burns and Chemical Exposure

Exposure to hazardous chemicals or heat sources can lead to serious injuries, requiring treatment and time away from work.

4. Heavy Machinery Accidents

Accidents involving malfunctioning machinery or improper safety protocols can lead to severe injuries, often covered under non-subscriber plans.

5. Transportation-Related Injuries

Work-related vehicle accidents can result in compensation for medical bills, lost income, and rehabilitation costs, especially for employees who drive as part of their jobs.

6. Falls from Heights

In construction and other high-risk industries, injuries from falling off ladders, scaffolding, or roofs are often covered by non-subscriber employer plans.

However, it’s important to remember: Since non-subscribers aren’t bound by state requirements, the coverage can be inconsistent. This makes it essential for injured employees to seek legal assistance to ensure fair compensation.

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Need Help With a Non-Subscriber Work Injury Case?

If you’ve been injured on the job and your employer is a Texas non-subscriber, navigating the legal system alone can be overwhelming. Without traditional workers’ compensation protections, it’s critical to understand your rights and the legal options available to you.

At Armstrong Lee & Baker LLP, our experienced personal injury attorneys in Houston, TX, specialize in representing injured workers. We’re here to help you:

• Prove negligence and hold your employer accountable
• Maximize compensation for medical expenses, lost wages, and emotional distress
• Fight for your rights throughout the legal process

Call us today at 832-402-6637 for a free consultation. We’ll guide you through every step of the legal process and ensure your rights are fully protected.

C.J. Baker

C.J. Baker represents victims with serious injuries and he won’t let any corporation or insurance company stop his clients from getting complete justice. He has won millions of dollars for victims of 18-wheeler crashes, oilfield equipment failures, offshore platform explosions, and defective medical devices. Our lawyers have 25+ years of combined experience.

Get in touch with C.J. Baker now.