How does workers’ compensation work in Texas?
According to the Small Business and Entrepreneurship Council, Texas is one of the best states to consider starting a business. Texas offers the best policy climate and the most incentives to business owners. This state also offers incentives to invest in small businesses and support capital gains and income.
If you choose to start a business in Texas, it’s important to know the state’s requirements concerning workers’ compensation. Let’s take a closer look at what you need to know about workers’ compensation insurance in Texas.
Do You Need Workers’ Compensation in Texas?
If you’ve explored workers’ compensation before, you know that most states require you to have workers’ compensation coverage. Texas, however, does not require your business to have this type of coverage. The exception to this is best said by the TDI, “Private employers who contract with government entities must provide workers’ compensation coverage for the employees working on the project.”
It’s important to note that every state is different! While Texas doesn’t require you to have workers’ compensation, another state’s regulations might require it.
If you’re considering expanding your business to another state, be sure to check with a legal professional about that state’s requirements. Our experts at Direct Work Comp can help you determine whether you need workers’ compensation in your state.
While the state’s laws don’t require you to have workers’ compensation, it’s still a good idea if you own a business in Texas. The key here is that workers’ compensation insurance can give your business legal protection. Workers’ compensation also helps protect your employees in the event that they become injured on the job and it helps protect your business. Here’s what you need to know.
To Protect Your Employees
Having workers’ compensation is an excellent way to protect your employees if they get injured or contract an illness as a direct result of their job.
Injuries are always a possibility, even if you perform extensive safety training and take adequate precautions. If you own a business such as construction, landscaping, manufacturing, or carpentry that deals with heavy machinery, your risk of injury from accidents or equipment malfunctioning is high.
So, how does workers’ compensation help? Workers’ compensation provides your employees with medical care and income benefits. It doesn’t stop there, workers’ comp protects your business.
To Protect Your Business
Another reason why you need workers’ compensation insurance in Texas is to protect your business. Workers’ compensation not only helps cover your employees’ expenses but also sets a limit on what medical expenses you have to cover out of pocket. Without proper coverage, your business may experience lawsuits if you’re unable to pay an employee’s medical expenses.
In addition, if you were taken to court over an employee’s injury and medical expenses, certain legal defense strategies are not applicable to businesses without workers’ compensation. These include assumption of the risk, contributory negligence, “last clear chance”, and co-worker negligence defenses. Not having workers’ compensation leaves your business vulnerable and unprepared.
Let’s say you owned a restaurant in Austin, Texas. The electrical components of your oven malfunctioned and caused a fire. One of your employees was injured with first and second-degree burns.
Even though the state of Texas doesn’t require you to have workers’ compensation coverage, you would be completely responsible for their expenses. This includes any medical expenses, transport to the hospital, time spent in the hospital, medication, physical therapy, and even emotional distress. You’ll also be responsible to cover any lost wages your employee misses during recovery.
These expenses can add up fast. If you’re not prepared or don’t have workers’ compensation insurance, you may be faced with hundreds of thousands in out-of-pocket costs. If your business is unable to pay, you can even face lawsuits that lead to bankruptcy.
What happens if you opt out of work comp?
We highly suggest against it, but you do have requirements to fulfill:
- File a DWC Form- 005 form every year
- Report Injuries & illnesses with a DWC Form-007 form (this is required when you have 5+ employees)
- Let new hires & current hires that they are not covered as you don’t have a workers’ comp policy – this needs to be in writing
There are the minimum requirements. TDI provides more information on what “nonsubscribers,” or employers who opt out of work comp, should do. If you are interested in protecting your employees and business with workers comp insurance, we will let you know how you can get it.
How to Get Workers’ Compensation in Texas
First, If you would like to purchase work comp insurance, you need to make sure it is from a company that is licensed in Texas. At DWC we are licensed in Texas, as well as 48 other states.
Secondly, it’s a good idea to find the best rate. It’s a common misconception that workers’ compensation rates are the same everywhere. However, not all companies will give you the same quote. Owning and running your own business can be expensive, so it’s always a good idea to compare insurance rates. At DWC, we offer instant quotes and can save business owners 30% on workers’ compensation.
At Direct Work Comp, our team can help your business access the best workers’ compensation insurance in Texas. But we don’t stop there! Our team of professionals is available to answer your questions, streamline your workers’ compensation program, handle claims, and provide a range of business advice, there’s no better way to help your business reach success.
Get a quote today and save on your workers’ compensation policy today!
Sources:
Texas is Big For Small Business & Entrepreneurship | SBEC
