Workers’ Compensation Insurance Requirements in Texas
Texas is the only state where most private employers can legally choose not to carry workers’ comp. That freedom comes with paperwork, posting rules and real legal exposure, and a few groups of employers don’t get the choice at all. This page covers what you must do either way. If you are still deciding whether to opt out, read our companion piece, Does Texas really not require workers’ comp?, which weighs the pros and cons.
The basic rule
Texas Labor Code § 406.002 says that, except for public employers and where another law requires it, “an employer may elect to obtain workers’ compensation insurance coverage.” Employers who buy coverage are called subscribers; those who don’t are non-subscribers. A business also becomes a non-subscriber on the day its policy ends.
Coverage, if you want it, comes from a licensed insurance company or through self-insurance (§ 406.003). Texas has no monopolistic state fund, so you can shop among private carriers or use an independent agent.
Who doesn’t get to choose
- Public employers: the state, counties, cities and other political subdivisions.
- Contractors on public building or construction projects. Under § 406.096, a government entity that signs a building or construction contract must require the contractor to certify in writing that it covers every employee on the project. Each subcontractor must give the same certificate to the general contractor.
- Anyone whose contracts require it. No statute forces it, but many general contractors, property managers and large clients will not let you on site without a certificate of insurance. In practice this is the most common reason small Texas businesses buy coverage.
If you carry coverage: what you must do
Being a subscriber does not end your obligations. Under § 406.005 you must:
- tell each new employee, at the time of hire, that you have coverage;
- post a notice of coverage where employees can see it, and update it when the information changes;
- notify every employee within 15 days if you obtain coverage or if your coverage ends or is canceled.
If you opt out: what you must do
Non-subscribers have more to do, not less. The Texas Department of Insurance, Division of Workers’ Compensation (DWC) lists these duties:
| Duty | When | Legal basis |
|---|---|---|
| File a notice of no coverage (DWC Form-005) with DWC | Every year between February 1 and April 30, after hiring your first employee, and after ending a Texas policy | Labor Code § 406.004 |
| Post a notice of no coverage in the workplace | At all times, in English, Spanish and other languages as needed | § 406.005 |
| Give written notice of no coverage to each new employee | At the time of hire | § 406.005 |
| Report work injuries, illnesses and deaths with more than one day of lost time | Within one month and seven days (employers with five or more employees) | § 411.032 |
Failing to file or post these notices is an administrative violation under the statute, which DWC can penalize. The annual filing can be made online through DWC’s Employer E-File tool.
The legal risk of opting out
A non-subscriber gives up the main benefit of the workers’ comp system: protection from most injury lawsuits. Section 406.033 sets the rules if an injured employee sues:
- You cannot defend yourself by arguing the employee was partly at fault (contributory negligence), that the employee assumed the risk, or that a co-worker caused the injury.
- The employee still has to prove you, or someone acting for you, were negligent.
- You can defend on the grounds that the employee meant to cause the injury or was intoxicated.
- An employee cannot waive these rights before getting hurt. Any agreement to do so is void.
In plain terms: a jury does not reduce the damages because your employee was careless. One serious injury can cost far more than years of premiums, which is why many non-subscribers buy an “occupational injury” or “employer’s liability” policy instead. Those policies are not workers’ comp, and the legal rules above still apply.
A practical example
A family-owned restaurant in San Antonio with 12 employees decides not to subscribe. To stay compliant it files Form-005 each spring, keeps the bilingual no-coverage notice posted next to its other labor law posters, and adds a written notice to its hiring paperwork. In August a cook burns his arm and misses two weeks. Because the restaurant has at least five employees and the injury caused more than a day of lost time, it reports the injury to DWC within the deadline. If the cook later sues, the restaurant cannot argue that he was careless, and the outcome depends on whether he can prove the restaurant was negligent.
Related guides
- Does Texas Really Not Require Workers’ Comp? The Full Answer
- Can an Employee Sue You If They’re Covered by Workers’ Comp?
- Workers’ Comp Requirements by State: 50-State Comparison Table
- Workers’ Comp Insurance for Restaurants and Food Service
Sources
- Texas Labor Code, Chapter 406 (§§ 406.002, 406.003, 406.004, 406.005, 406.033, 406.096)
- Texas Department of Insurance: non-subscriber notices and Employer E-File
Last checked against the sources above on October 2, 2026. This is general information, not legal or insurance advice. Talk to a licensed agent or a Texas employment attorney before deciding whether to subscribe.