Workers Compensation Insurance Requirements in Texas

Texas Labor Code § 401.001 requires most employers with employees to carry workers compensation insurance. However, Texas differs significantly from most states by allowing certain classes of workers to opt out. Sole proprietors, partners in general partnerships, members of limited liability companies (LLCs), and officers of certain closely-held corporations can elect non-coverage under § 401.012. Additionally, § 401.011 exempts employers with fewer than employees working during any part of a pay period from coverage obligations, though coverage is still available on a voluntary basis.

Texas employers can obtain coverage through three routes: (1) private insurance carriers, (2) the non-exclusive Texas Workers Compensation Insurance Fund (state fund), or (3) self-insurance if they meet financial and administrative requirements. This is a non-exclusive state fund system, meaning employers are not required to use the state fund but may do so. Private insurers dominate the market.

Texas's coverage scope under § 406.011 includes all occupational injuries and diseases, regardless of fault. Covered employees receive medical benefits (with some limitations), temporary disability income replacement (at 60% of average weekly wage, capped), permanent disability benefits, and death benefits for dependents. Texas law provides no recovery for pain and suffering, punitive damages, or lost wages beyond the wage replacement benefit.

Unlike many states, Texas allows employees to sue their employer for work-related injuries if the employer does not carry workers compensation coverage (a major incentive for compliance). This creates substantial liability exposure for non-compliant employers. Additionally, employees and employers covered by workers compensation cannot pursue tort claims against each other, except in narrow circumstances.

Texas Labor Code § 401.011 provides broad exemptions from workers compensation coverage. Sole proprietors, partners in general partnerships, members of LLCs, and officers of closely-held corporations can opt out of coverage if they meet requirements, even if they have employees. However, once opting out, they remain personally liable for work injuries. This creates a significant personal liability exposure.

Employers may also be exempt if they qualify as a self-insured employer under § 401.025, meeting strict financial and administrative standards set by the Texas Department of Insurance. Self-insured employers must maintain security deposits, comply with claims handling procedures, and meet solvency requirements.

Employees working as independent contractors are not covered by workers compensation. Misclassification of employees as contractors is a significant issue; the Texas Department of Insurance reviews classifications. Additionally, certain industries may have specialized rules or exemptions. Employers can contest coverage claims by arguing the injury was not work-related, the employee was engaged in conduct outside the scope of employment, or the claimant was not an employee (e.g., volunteer, independent contractor).

Employees receiving workers compensation benefits generally cannot sue their employer in tort, with rare exceptions for gross negligence or criminal conduct. This exclusive remedy doctrine shields employers from larger civil judgments but guarantees no-fault benefits. Employers without required coverage lose this immunity and face potential unlimited tort liability from injured employees.

Step 1 — Document the Injury: Immediately document the workplace injury by writing down the date, time, location, nature of injury, witnesses present, equipment involved, and any medical treatment received. Take photographs of the injury site or equipment that caused injury. Keep copies of medical records, prescriptions, hospital discharge papers, and any imaging (X-rays, MRI). Document lost wages by collecting pay stubs and communications with your employer about time off. Maintain a file with all correspondence related to the claim.

Step 2 — Report to Your Employer: Notify your employer as soon as practicable after the injury occurs; Texas law requires notification within 30 days to preserve benefits eligibility under § 409.22. Provide written notice (email or letter) in addition to verbal notice; include the date, time, nature of injury, and any witnesses. Request your employer provide the workers compensation insurance information and claim form. If your employer delays providing insurance information or refuses to file a claim, this is a red flag indicating non-compliance.

Step 3 — File a Claim: Determine whether your employer carries insurance by asking for the policy number and insurer name. Contact the employer's workers compensation insurer directly to report the injury and file a claim. The insurer will provide a claim form (DWC Form-001) to complete. If your employer cannot provide insurance information or claims they have no insurance, report this to the Texas Department of Insurance at www.tdi.texas.gov or by calling 1-800-578-4677. You can also file a complaint if the employer retaliated against you for reporting the injury.

Step 4 — Investigation and Benefit Determination: The workers compensation insurer will investigate your claim, typically within 7-14 days of notice. The insurer will request medical records, interview witnesses, and may order an independent medical examination (IME). You are entitled to choose your own treating physician; do not delay medical treatment pending claim approval. The insurer must approve or deny the claim within 60 days under § 408.021 (though emergency medical care is covered regardless of claim status). If approved, you receive medical coverage and wage replacement at 60% of average weekly wage (capped at the state maximum). The process typically takes 30-90 days from filing to benefit determination.

Step 5 — Consult an Attorney: Contact a workers compensation attorney if: (1) your claim is denied without explanation, (2) you receive a low benefit calculation you believe is incorrect, (3) the insurer pressures you to settle for less than you believe owed, (4) you suffer permanent disability and need guidance on permanent disability benefits, (5) the employer retaliates against you, or (6) your employer appears not to have insurance (creating potential tort claim rights). Most Texas workers compensation attorneys work on contingency, taking 25% of benefits recovered (subject to court approval). Initial consultation is typically free. The State Bar of Texas attorney referral service can connect you to a workers compensation specialist in your area.