Non-Subscriber FAQs

Is Workers' Compensation Mandatory?
In Texas, employers may elect not to carry workers’ compensation. The new Workers’ Compensation Act contains new provisions and penalties you, as an employer, should know about.
Why Carry Workers' Compensation?
The insurance carrier assumes liability for compensation for an employee’s injury without regard to fault or negligence.
Doesn't This Mean The Insurance Company Ends Up Paying Extra Since They Don't Consider Fault Or Negligence?
YES! Many people feel this is a major cause of the exorbitant rates in Texas. Since the carrier pays claims without contesting them, this just causes the employer’s individual rate surcharge to increase. There are many fraudulent claims paid.
What Is A Workers' Compensation Subscriber?
The previous workers’ compensation law used the word “subscriber”. Senate Bill I simply refers to Non-Subscribers as employers that “Reject the Act”.
Can An Employer Who Has Workers' Compensation Still Be Sued?
YES! A surviving spouse or heirs of an employee whose death was caused by an intentional act or omission by an employer, or the gross negligence of an employer, may sue for and recover exemplary damage. Also suits can arise after the claims determination process has been completed.
What Requirements Does Senate Bill I Place On The Employer?
EMPLOYERS MUST:

Notify the State they do or do not have coverage
Notify the State when they terminate coverage
Post notices, with exact wording, in the work place
Notify new employees of the absence of coverage
Notify existing employees of coverage termination
Notify employees how to file claims
Many employers must have drug prevention programs

What Are The Fines For Not Posting The Notices?
Employers who reject Workers’ Compensation and fail to notify the State each year may be assessed a penalty up to $500 for each day of non-compliance. Also, there is a fine of up to $500 if employees are not properly notified. This applies to each time a new employee is hired. It requires multiple postings, and specific wording in more than one language.
If An Employer Rejects Workers' Compensation, Does An Employee Automatically Win A Lawsuit?
NO! Section 3.04 of Article 8308 provides that the injured employee must prove negligence of the employer, or of some agent or servant of the employer. The employer may defend the suit by showing the accident was caused by: (A) an intentional act of the employee, or (B) the employees’ intoxication (including substance abuse).
In Order To Show Negligence On The Part Of The Employer, What Must The Employee Prove?
The employer can be found to be negligent if the employee can show that:

You failed to maintain adequate staff to perform the job safely
You failed to maintain safe premises and working conditions
You failed to provide or maintain the necessary equipment to perform the job safely
One of your supervisors or employees was negligent

Are More And More Employers Rejecting Workers' Comp?
DEFINITELY!

But, you must comply with the law, and you should have a plan of protection for yourself which includes:

Compliance Package containing all forms and posters required by law
ERISA document for each employee detailing the Employee Welfare Benefit Plan
A package of Insurance covering Medical expense, Accidental Death & Dismemberment, Disability, and money for Legal defense and Settlement
A Safety Program that is well maintained and documented

Can I Ever Obtain Workers' Compensation Later?
YES! Simply buy another policy and coverage will commence on the new effective date.
Who Can An Employer Turn To?
Consultants who specialize in risk management and Insurance Agents that can quote both Workers Compensation and Non-Subscription policies. If the agent can’t quote both, he can’t possibly provide you with the proper coverage.
What Percentage Of Companies Are Non-Subscribers?
FACTS*:

44% of all Texas Employers are Non-Subscribers
20% of all Employees are no longer covered under Workers’ Comp
53% of all Texas Manufacturers are Non-Subscribers
49% of all Texas Retailers are Non-Subscribers
42% of all Texas Real Estate Sales and Management Companies are
Non-Subscribers
38% of all Texas Transportation Companies are Non-Subscribers
37% of all Texas Construction Contractors are Non-Subscribers
30% of all Texas Healthcare Employers are Non-Subscribers
94% of all large Non-Subscriber Employers (200 Employees and up) offer
a responsible alternative to workers’ compensation
30% of the small Non-Subscribing Employers offer a responsible
alternative to Workers’ Compensation
Less than 3% of all injury claims ever go to the Court House in Texas

* Texas A&M study on Non-Subscribers as commissioned by the Texas Department of Insurance