It may seem strange that Texas allows employers to “opt out” of providing coverage to injured workers. However, there are a few reasons why companies are allowed to elect to pay for an injured worker’s medical bills and lost wages. The best way to understand the concerns of both the employer and the employee is to examine the history of Texas’ work injury laws.
The Evolution of Texas Work Injury Compensation Laws
In the beginning of the 1900s, working conditions were extremely poor, and fatalities and injuries were commonplace occurrences. Workers in industrial trades, construction, and manual labor occupations would often be unable to support their families if they were injured, and would have no other option but to sue an employer after being hurt on the job.
As the court system became overrun with lawsuits against employers, companies attempted to cope with the strain in a number of ways:
- Employer-sponsored benefits. Before workers’ compensation was created, many utility companies—such as railroads, lumber mills, and steel works—elected to offer benefit plans to workers who were injured on the job. These included medical treatment costs and even work injury death benefits for the family of an employee who died on the job. While the plan was well-intentioned, many employees didn't receive these benefits, since the employer could still deny liability and refuse to pay—meaning the employee would have to sue to recover damages anyway.
- Government-sponsored benefits. Employer benefits may have had their flaws, but they did offer a few benefits to both employees and companies. If the system was mandatory, employees would be guaranteed benefits, and the employer could still be protected from lawsuits. However, not all employers could afford to suffer the loss of profits it would take to provide benefits to all employees. The compromise was to create a state-funded system which provided benefits regardless of fault: the modern-day workers' compensation law.
- Non-subscriber exceptions. In the 1990s, there was a backlash against the Texas workers’ compensation system as costs for work injuries skyrocketed. Some employers didn't want to purchase coverage for their employees, for a multitude of reasons.
- Providing insurance to a large group of employees can be expensive.
- Some companies believed that providing “guaranteed” coverage encouraged claims.
- Some employers didn't see the benefit of workers’ comp coverage, since the risk of injury in their company was extremely low. A person working in a bank doesn't have the same potential for injury as a steel worker, but both were required to purchase policies and pay for them—even if claims are never made.
Companies demanded the right to refuse to purchase workers’ compensation coverage, even if it made them more exposed to injury lawsuits. In 1993, lawmakers added language to the Texas Workers’ Compensation Act that allowed most private sector employers to elect whether or not they'll provide workers’ compensation insurance.
Non-Subscription Isn't Necessarily Better for the Company
Simply put, an employer that doesn't purchase workers’ comp coverage loses the right to blame the injury on the worker, or shift blame for the accident to another employee. Injured workers retain their full rights to sue a non-subscribing employer, with the added benefit that employers only have a handful of defenses that can be used in their cases.
While non-subscription may seem cheaper up front, the costs of a major lawsuit—including medical costs, lost wages, pain and suffering, penalties, and punitive damages—could end up costing an employer millions on a single case.
In order to get compensation from a non-subscribing employer, you'll need an experienced Texas work injury attorney to guide you through your case. To find out how much your claim could be worth, contact the Packard Law Firm today to set up your free, confidential, and no-obligation consultation.