Part 1 of 3: Should you “Opt Out” of the Texas Workers Compensation System?

Currently, the majority of employers in Texas still elect to participate in the State’s workers’ compensation system but an ever-increasing number of employers are finding that the benefits of becoming a “non-subscriber” outweigh the benefits of participating in the State system.  By developing and administrating their own employee injury benefit plans, these non-subscribers have found this alternative to be a more cost-effective approach to handling employee on-the-job injury claims and employees often find they are provided with better benefits under the employer's injury plan than were provided by the State's workers' compensation system.

However, before deciding to follow in the footsteps of those who “opt-out” of the Texas workers compensation system, an employer must first qualify to become a "non-subscriber" by annually filing paperwork with the State establishing that they have an alternative program in place as well as sufficient finances and insurance to cover the program.  An employer must also give careful consideration to the consequences of electing to become a non-subscriber, such as losing certain common law defenses against employee personal injury claims.