Workers' Compensation
A statutorily-created insurance system providing no-fault medical and wage benefits for work-related injuries and illnesses in exchange for limiting employer liability. Texas is the only state where private-employer workers' compensation coverage is elective rather than mandatory, non-subscribing employers face common-law negligence suits without contributory negligence, fellow-servant, or assumption-of-risk defenses (Tex. Lab. Code § 406.033). Subscribing employers benefit from the exclusive-remedy bar (§ 408.001).
Most Texas private employers are not required to carry workers' compensation: Tex. Lab. Code § 406.002 makes coverage elective except for public employers and where another law requires it. An employer that goes without must notify its employees and the Division of Workers' Compensation, and it loses the defenses barred by § 406.033.
Workers' Compensation is a statutorily-created insurance system providing no-fault medical and wage benefits for work-related injuries and illnesses, in exchange for limiting employer liability through an exclusive-remedy framework. Texas is unique among U.S. jurisdictions: private-employer workers' compensation coverage is elective, not mandatory. Texas employers can choose to subscribe to workers' comp insurance (gaining exclusive-remedy protection) or operate as "non-subscribers" (preserving common-law negligence liability but without the standard tort defenses). The choice has substantial financial and operational implications.
- Regulator
- Division of Workers' Compensation, Texas Department of Insurance
- Coverage
- Elective for private employers (§ 406.002)
- Notice of injury
- To the employer within 30 days (§ 409.001)
- Claim deadline
- Filed with the division within one year (§ 409.003)
- Non-subscriber notice
- Filed with DWC each year between Feb. 1 and Apr. 30 (§ 406.004)
The Texas elective system
Section 406.002 makes Texas workers' comp coverage "generally elective" for private employers, Texas remains the only U.S. state with this opt-out structure. Employers choose between two paths: (1) subscriber, purchase workers' comp insurance through commercial carrier, self-insure (with regulatory approval), or join group self-insurance; gain exclusive-remedy protection under § 408.001; or (2) non-subscriber, decline workers' comp; preserve common-law tort framework but lose the contributory negligence, assumption-of-risk, and fellow-servant defenses under § 406.033. Public-sector employers (state, certain political subdivisions) have different coverage requirements; certain industries face mandatory coverage under specific statutes.
The subscriber framework, exclusive remedy
For subscribing employers, § 408.001 makes workers' comp benefits the exclusive remedy for work-related injuries: "Recovery of workers' compensation benefits is the exclusive remedy of an employee covered by workers' compensation insurance coverage or a legal beneficiary against the employer for a work-related injury sustained by the employee." Practical implications: (1) employees forgo tort suits against subscribing employers for ordinary work injuries; (2) fixed benefit schedule, medical, income (TIBs, IIBs, SIBs, LIBs, DIBs), and death benefits per statutory schedule; (3) predictable cost for employers; (4) quick benefits for employees without proving fault; (5) limited remedies, no compensatory damages for emotional distress, no punitive damages.
Exceptions to exclusive remedy
Several exceptions allow subscribing-employer tort suits despite exclusive remedy: (1) intentional torts, employer's intentional injury of employee; (2) exemplary damages for a death, Texas Constitution Art. XVI § 26 and § 408.001(b) let the surviving spouse and heirs of the body recover exemplary damages when the employer's intentional act or omission or gross negligence caused the death; (3) third-party tort claims, § 417 preserves employee's claim against responsible third parties (with carrier subrogation); (4) retaliation claims, § 451.001 prohibits retaliation for filing workers' comp claim, supporting separate tort cause of action; (5) specific statutory claims not covered by exclusive remedy. Most work injury claims are channeled through workers' comp; tort claims against subscribers are narrow exceptions.
The non-subscriber framework
Non-subscribing employers face common-law negligence liability for work injuries, but with substantial procedural advantages for employees. Section 406.033 prohibits non-subscribers from asserting: (1) contributory negligence; (2) assumption of risk; (3) fellow-servant rule (negligence of co-employee). The plaintiff must still prove employer negligence (§ 406.033(d)) and damages, but without the principal common-law defenses. Pre-injury waivers of non-subscriber liability are void (§ 406.033(e)), employees cannot waive the right to sue before injury. In re East Texas Medical Center Athens, No. 23-1039 (Tex. Apr. 25, 2025) clarified that non-subscribers can invoke proportionate responsibility under Tex. Civ. Prac. & Rem. Code Ch. 33 to allocate fault to responsible third parties.
The economic calculation
Many large Texas employers, particularly in retail, transportation, healthcare, operate as non-subscribers because the math favors it: (1) workers' comp premiums can be substantial for high-injury industries; (2) non-subscriber alternative plans (often called "occupational injury benefit plans" or ERISA-governed welfare plans) provide medical and wage benefits without statutory schedule constraints; (3) litigation costs for non-subscriber tort suits can be lower than expected if plans address most injuries economically; (4) large self-insured employers can absorb tort exposure as cost of doing business. Smaller employers typically subscribe, exposure to a single substantial tort verdict can be catastrophic.
Benefits structure (subscribers)
Texas workers' comp benefits include: (1) medical benefits, reasonable and necessary care related to compensable injury; lifetime if needed; (2) Temporary Income Benefits (TIBs), 70% of the difference between the average weekly wage and post-injury weekly earnings (75% for the first 26 weeks if the employee earns under $10 an hour), up to the maximum weekly benefit, § 408.103; (3) Impairment Income Benefits (IIBs), 70% of AWW based on impairment rating; (4) Supplemental Income Benefits (SIBs), for serious impairment with continuing earning loss; (5) Lifetime Income Benefits (LIBs), for catastrophic specific injuries (loss of two limbs, total blindness, severe brain injury); (6) Death Benefits, to surviving spouse/children of fatally injured worker; (7) Burial Benefits. Benefits are administered through the Division of Workers' Compensation (DWC) of the Texas Department of Insurance.
Subrogation
Workers' comp carriers (or self-insured subscribing employers) have subrogation rights against responsible third parties for benefits paid: (1) § 417.001, creates the subrogation right; (2) § 417.002, specifies recovery scope (benefits paid); (3) § 417.003, addresses settlement and apportionment with injured worker. The carrier has "first dollar" recovery against third-party tortfeasors, typically recovers benefits paid before the worker recovers tort damages, with statutory apportionment for amounts beyond benefits. This makes workers' comp cases involving third-party negligence (auto accidents, premises liability, products liability) operationally complex; coordination with subrogation is essential. Non-subscribers do not have subrogation rights, § 417 applies only to subscribers.
Retaliation under § 451.001
Texas Labor Code § 451.001 prohibits retaliation against employees for filing workers' comp claims, hiring an attorney to represent claim, instituting proceeding, or testifying in proceeding. A violator is liable for reasonable damages, and a discharged employee is entitled to reinstatement. § 451.002(a)-(b). A district court may also enjoin a violation. § 451.003. The employee carries the burden of proof, and Chapter 451 has no attorney's fee provision. § 451.002(c). The retaliation cause of action operates outside the exclusive-remedy framework, it's a separate statutory tort, not a workers' comp benefit issue. Employers must structure separation decisions for injured employees carefully to avoid retaliation exposure.
Notices required of an employer without coverage
An employer without coverage has these notice and reporting duties. Missing one is an administrative violation.
- Written notice to the division that the employer has elected not to obtain coverage (§ 406.004). DWC requires the filing between February 1 and April 30 each year, after hiring the first employee, and after a policy ends.
- Notice to each new employee, at the time of hire, that the employer has no coverage (§ 406.005(b)).
- A posted notice of no coverage at conspicuous places in the workplace, which DWC requires in English, Spanish and any other language needed (§ 406.005(c)).
- A report to the division of each on-the-job injury causing more than one day away from work, and of each occupational disease the employer knows of (§ 411.032). DWC applies the reporting requirement to employers with five or more employees.
How much does workers' comp in Texas pay?
Temporary income benefits pay 70 percent of the difference between the employee's average weekly wage and what the employee earns after the injury, or 75 percent for the first 26 weeks for an employee earning under $10 an hour (§ 408.103). The weekly amount cannot exceed the state average weekly wage (§ 408.061(a)). No income benefits are paid for a disability lasting under a week, though medical benefits still are. If it lasts two weeks or more, benefits run from the first day (§ 408.082).
Who is exempt from workers' comp in Texas?
Three groups of employees fall outside the Act entirely: domestic workers and casual workers employed incidentally to a personal residence, workers covered by a federal compensation system, and most farm and ranch employees (§ 406.091(a)). An employer may still buy coverage for domestic, casual, farm and ranch workers. One that does not keeps its common-law defenses as to those employees, so the § 406.033 penalty does not apply to them (§ 406.091(b), (c)).
Is Texas a monopolistic workers' comp state?
No. A Texas employer that elects coverage buys it from a licensed insurance company or qualifies to self-insure (§ 406.003); there is no single state fund every employer must use. Most private employers may also decline coverage altogether, which no monopolistic system allows. Public employers are the exception to the election (§ 406.002(a)), and a contractor on a public building or construction project must certify coverage for its workers (§ 406.096).
What does an injured worker have to do to get Texas workers' comp benefits?
Two deadlines control. The worker must tell the employer, or a supervisor, about the injury within 30 days (§ 409.001), and must file a claim with the division within one year (§ 409.003). For an occupational disease, both clocks start when the worker knew or should have known the illness was work-related. Missing either deadline releases the employer and carrier unless there is good cause, the employer had actual knowledge (for the 30-day notice), or the claim goes uncontested (§§ 409.002, 409.004).
- An injured employee's report to the employer is due within 30 days of the injury, and the claim with the division within one year (§§ 409.001, 409.003).
- A covered employer must report an injury that keeps the employee out more than one day to its carrier by the eighth day and give the employee a written copy (§ 409.005).
- When the employer is a non-subscriber, the claim is a negligence suit, and personal-injury suits in Texas generally must be filed within two years after the claim accrues (Tex. Civ. Prac. & Rem. Code § 16.003).
- A firing or other discrimination because the employee filed a claim in good faith or hired a lawyer is a separate claim under § 451.001, with damages and reinstatement as remedies.
- A Texas lawyer who handles workplace injury or workers' compensation matters can sort out which system applies and which deadlines are running.
For a Texas employer, the choice between carrying coverage and going without shapes how a workplace injury is resolved. A covered employee's remedy against the employer is generally the benefit system itself. § 408.001. A non-subscriber faces negligence suits without the contributory negligence, assumption-of-risk and fellow-servant defenses. § 406.033. Some non-subscribers adopt their own occupational injury benefit plans. For a covered employee, firing the employee for filing a claim in good faith is a separate violation. § 451.001. The Supreme Court of Texas held that the predecessor of that statute does not reach a non-subscriber. Texas Mexican Ry. Co. v. Bouchet, 963 S.W.2d 52 (Tex. 1998). The injured employee's deadlines also differ: 30 days to notify the employer and one year to file a benefits claim (§§ 409.001, 409.003), or generally two years to sue a non-subscriber for negligence (Tex. Civ. Prac. & Rem. Code § 16.003).
Companion article: Before Firing an Employee