More Texas employers opt out of workers’ compensation insurance

Workers in Texas should be aware that the State allows employers to opt-out of workers’ compensation insurance, and know what this means for them.

The federal program for workers' compensation works the same in Texas as it does in other states. Texas and Oklahoma, however, are the only two states that allow employers to opt out of the workers' compensation insurance program. Workers' compensation insurance provides compensation for employees who are approved, and when employers opt out of this coverage, it falls upon them to come up with a different approach to providing benefits to their workers that need them. It can be helpful for employees, both potential and current, to understand the extent of this phenomenon, and what it means for them.

How have the numbers been trending?

The year 2010 was when there was a large drop in non-subscribers, with the exception of large companies with over 500 workers, who had a jump in the rates of non-subscribers. Since then, things have trended differently. The amount of employers employing over 500 workers who opt out of workers' compensation insurance dropped 6% between 2010 and 2014, such that now only 19% of employers this size have opted out. Since then, the number of small employers opting out has increased or stayed the same, aside from mid-size companies with 10-49 employees.

The smallest companies with only one to four employees have the highest rates of opting out, with about 43% making the decision to opt out in 2014. The second-largest companies, which have 100-499 employees, actually have the lowest amount of employers who choose to opt out, with that percentage being only 14% in 2014. The industries that have seen a decrease in the non-subscription rate include Construction, Mining, Utilities, Hunting, Fishing, Forestry, and Agriculture. Those that have not had significant changes include Transportation, Retail Trade, Wholesale Trade, Educational Services, Health Care, Professional Services, Real Estate, Finance, Food Services, Accommodation, Entertainment, and Arts.

What does this mean for workers?

One thing that has come to light as a result of recent trends is that non-subscription rates are the lowest they have been since 1993. This means that for the majority of workers, their workers' compensation rights are protected federally. If an employer does not offer a benefit plan, that means they have two options: to either offer a different benefit plan for their employees or subject themselves to tort litigation in the event that a workplace injury does occur. This means that workers in Texas should still make sure they are informed as to whether their employers has opted out of workers' compensation insurance, and if this is the case, they should find out what types of benefits are offered. If a decision is made to withhold workers' compensation benefits, it can always be appealed.

Anyone living in Texas who is dealing with litigation due to a injury sustained on the job or a workers' compensation claim may find it beneficial to consult an att0orney in the local area who practices employment law.