Texas is the only state in the U.S. where workers’ compensation coverage is not mandatory for employers. The biggest reasons companies choose not to provide state-regulated insurance is that the program is expensive and it provides a lot of protection to the employee. Under workers' compensation, employees are guaranteed to receive payment for lost income and injury-related medical bills when they suffer a work-related injury or illness.
Your Company’s Insurance Policy May Not Be Equal to Workers’ Compensation
Millions of Texas employees are covered under their company’s privately-insured injury policy instead of workers’ compensation. Although these employers are still considered “non-subscribers” to federal workers’ compensation, they do allow injured workers to collect some benefits after an illness or accident on the job. However, these alternative policies typically offer less protection to the employees.
Companies may benefit by offering alternative coverage plans because:
- Workers do not know that their “workers’ comp” is actually an alternative policy. Employers who provide workers' compensation have limited liability if an employee files an injury claim, so this can be another good reason why an employer would lead a worker to believe that the company has workers’ compensation insurance. A company can provide limited injury benefits under an alternative policy and refer to the payments as “workers’ comp,” telling the worker that he cannot sue if he accepts the payment.
- These policies may be limited. Unlike federal coverage where all injury-related expenses must be covered, private insurers can impose both dollar and time limits on their policies. If the employer does not want to pay out of pocket after a claim’s coverage limit has been reached, the employer may simply stop benefits.
- They are not government-regulated. The policies and coverage provided through workers’ compensation have clear regulations set forth by lawmakers. Private insurance is not licensed or regulated by a governing body, making it less likely that the employee will be protected.
- The employers can set their own rules. There are many ways employers can make it as difficult as possible for employees to qualify for benefits through private policies, including requiring mandatory injury reporting within 24 hours of an accident or requiring a supervisor to attend an employee’s doctors’ visits.
- There are no disability or death benefit requirements. Workers’ comp offers the possibility of lifetime benefits after a permanent disability, as well as death benefits if an employee is killed on the job. Private insurance does not offer any such guarantees.
- There are no job protection requirements. Workers’ compensation law includes a provision to prevent retaliation or termination of an employee who seeks job-related injury compensation, while non-subscribing employers are free to demote or employees at will.
Can a Texas Company Offer No Benefits and No Workers’ Compensation Insurance?
Yes. Any company that does not subscribe to workers' compensation insurance can be considered a non-subscriber, even if the company does offer alternative benefits. Under the law, a worker can file a lawsuit against a non-subscriber to recover the full amount of his or her injury costs, plus any additional amounts for pain and suffering or permanent disability—even if they received some benefits under an alternative insurance plan. As an added benefit, any employer who fails to provide federal workers' compensation can be liable for the full amount of damages if the company is found to be just one percent at fault for the injury.
Not only can an employer be forced to pay damages to an employee, the employer can also be required to pay federal penalties for negligence. Texas employers who do not carry workers' compensation coverage are required to communicate their non-coverage status to their workers, and they are required to report any work-related injuries that result in more than one day of lost time to the Division of Workers' Compensation (DWC). If these requirements are not met, employers can be subject to administrative fines and fees, causing the loss of even more of their profits.
The costs to an employer for failing to provide proper benefits can quickly add up, resulting in the loss of hundreds of thousands of dollars in many cases. To find out how much your non-subscriber claim could be worth, contact the Packard Law Firm today to speak with a work injury attorney in your free, confidential, and no-obligation consultation.