Texas Workers' Compensation Act: Employers Compliance Checklist 2024

Texas Workers’ Compensation Act: Employers Compliance Checklist 2024

Every state has slightly different workers’ compensation laws, but the core of the laws remains the same. Texas breaks the mold by changing workers’ comp requirements and offering employers more options and alternatives to provide for their employees with injuries or illnesses.

Here’s what employers should know about the essentials of the Texas Workers’ Compensation Act and how Mosey can help manage state compliance.

What Is the Texas Workers’ Compensation Act?

The Texas Workers’ Compensation Act is a set of laws designed to protect employees and employers in case of work-related injuries or illnesses. It establishes a system where injured employees receive medical care and wage replacement benefits while employers gain protection from lawsuits related to those injuries.

Most states mandate that businesses provide workers’ compensation to their employees, but the Texas Workers’ Compensation Act, as updated in 2023, differs from most other workers’ comp laws. The act requires employers to provide financial compensation to eligible employees through any means, even if they do not utilize workers’ compensation.

How Does Workers’ Compensation Work in Texas?

Workers’ compensation in Texas operates under a “no-fault” system, meaning employees are generally entitled to benefits regardless of who was at fault for the injury. Benefits typically cover medical expenses related to the injury, such as doctor visits, surgeries, and medications.

Additionally, workers may receive wage replacement benefits if their injury prevents them from working. Workers’ compensation can also provide vocational rehabilitation, a career retraining system for people whose injuries or illnesses prevent them from returning to work in their former field but don’t necessarily prevent them from working in general.

Are All Texas Employers Required To Have Workers’ Compensation Insurance?

Not all employers in Texas are required to carry workers’ compensation insurance. The decision to provide workers’ comp insurance is voluntary for most private employers. However, public employers, including the state and the government, must provide coverage.

Not providing workers’ compensation doesn’t eliminate an employer’s responsibility when an employee becomes ill or injured on the job. Texas employers are still responsible for providing coverage to their employees — they just don’t need to use workers’ comp to do it.

What Is Texas Non-Subscriber Insurance?

Texas non-subscriber insurance is an alternative to workers’ compensation insurance. Employers who opt out of the state workers’ comp system are called “non-subscribers.” Instead of purchasing workers’ compensation insurance, non-subscribers directly assume the financial responsibility for workplace injuries or illnesses.

Non-subscribers must notify their employees of their non-subscriber status and provide alternative benefits through a written Employee Notification Plan (ENP). These plans typically offer benefits like medical coverage and wage replacement, but the specifics can vary widely between employers.

The decision to become a non-subscriber requires careful consideration. Financial assistance from an employer can be substantially more expensive than no-fault workers’ compensation. Texas employers should carefully consider their insurance options because they must offer their employees substantial compensation if they become injured or ill on the job.

What Are the Pros of Workers’ Compensation?

If you’re deciding between workers’ compensation and non-subscriber insurance, several factors come into play, each impacting financial costs, legal obligations, and employee relations differently.

Workers’ compensation insurance provides a structured system where employees receive benefits for work-related injuries or illnesses, regardless of fault. There are many protections and benefits that persuade employers to utilize the traditional workers’ comp system:

Legal Protection

Workers’ compensation is a no-fault system. Both parties are protected if an employee becomes ill or injured at work. Your employee will receive compensation for medical bills and lost wages, and you’re protected from legal action in most circumstances.

Predictable Costs

Premiums for workers’ compensation insurance are based on industry classifications and payroll, offering a predictable cost structure that helps with budgeting. You’ll make the same recurring payment with no surprises.

Employee Benefits

Workers’ comp provides medical coverage for injuries and wage replacement during recovery. The benefits are excellent, especially for the premiums employees pay. Your employees may feel more secure knowing that workers’ comp is available, especially if you work in an industry where employees perform physical labor.

What Are the Cons of Workers’ Compensation?

However, there are a few reasons why Texas employers may decide to opt out of workers’ compensation:

Cost Considerations

Premium rates can be high. High-risk industries or businesses with a history of claims, like those where employees regularly work with chemicals or heavy machinery, will often have much higher compensation requirements than your average office or retail job.

May Pay More Than Necessary

If you have 10 employees in decent health who all work gentle desk jobs, you may rarely or never need to use workers’ compensation. You’ll be making monthly contributions that may amount to substantially more than the amount your employees will ever claim.

What Are the Pros of Non-Subscriber Insurance?

Non-subscriber insurance allows businesses to opt out of the state workers’ compensation system and self-insure against workplace injuries. This may benefit employers who rarely handle workers’ compensation claims.

Cost Savings

By managing claims directly, non-subscribers can potentially save on insurance premiums and administrative costs, especially in industries where workplace injuries or illnesses are uncommon.

Flexibility

Employers have more control over the benefits offered under a non-subscriber plan, tailoring coverage to meet their needs and budget. But this flexibility isn’t just about cutting corners. You may want to offer your employees something more comprehensive than workers’ compensation, and private insurance will allow you to provide them with more.

What Are the Cons of Non-Subscriber Insurance?

When you forego the protections of the state workers’ compensation system, you may encounter some challenging legal and financial obstacles:

Legal Risks

Non-subscribers lose the immunity from lawsuits that workers’ compensation provides, making them vulnerable to potentially costly legal actions by injured employees. In other words, employees can file a personal injury lawsuit against you regardless of the insurance benefits they receive.

Employee Perception

Some employees may view non-subscriber status negatively, perceiving it as a lack of commitment to their well-being. Employees may feel less safe working with an employer they feel provides the bare minimum of injury or illness coverage.

What To Consider for Texas Workers’ Compensation in 2024

Workers’ Compensation in Texas requires much more consideration than workers’ comp in other states due to the vast array of available options and substitutes. Your workers’ compensation checklist ultimately depends on the route you feel is best for your business.

Consider Your Coverage Needs

Assess whether your business must provide workers’ compensation insurance under Texas law. Private employers have the option to opt in or out of the system. If you opt out, you’ll need to find a non-subscriber option for your business. If you choose workers’ compensation, you can sign up through the Texas Workers’ Compensation Board.

Review Non-Subscriber Options

You’ll also need to choose a type of non-subscriber insurance that best suits your business’s needs. This can be a lengthy process that involves special considerations, especially if your company has many employees.

If you choose not to participate in the state workers’ compensation system, you must develop and maintain an Employee Notification Plan (ENP). Ensure the ENP is properly communicated to all employees and includes details on the benefits provided in lieu of workers’ compensation.

Weigh the pros and cons of using non-subscriber options against the pros and cons of using workers’ compensation before making your final decision.

Maintain Compliance Documents

Keep all records related to workers’ compensation or non-subscriber status, including insurance policies, ENPs, and employee acknowledgments. Update these documents regularly to reflect any changes in coverage or regulations.

You’re still required to provide mandatory reports to the state workers’ compensation system even if you opt out of workers’ comp. Even if you opt out, you’re still liable for complying with reporting requirements.

Educate Employees of Their Rights

Educate your employees on their rights under the Texas Workers’ Compensation Act or the ENP if you opted out of workers’ compensation. Employees need to know how to file a claim and what steps to take if they get injured or become ill due to their work duties.

Provide training on workplace safety practices to reduce the risk of injuries and illnesses. Proper training and strong safety protocols can help reduce the need for employees to utilize workers’ compensation and other insurance. Most importantly, implementing safe workplace practices can keep your employees protected and healthy.

Report and Respond to Injuries and Illnesses

Make sure your employees know what to do if they develop a work-related injury or illness. Explain the reporting process and verify that your process complies with the law. Additionally, workers’ comp has strict reporting protocols. If you’re utilizing a different insurance system, they can provide you with useful and effective reporting requirements.

Review Your Coverage

Periodically reassess your coverage needs based on changes in your workforce, business operations, or regulatory requirements. An insurance professional or a legal advisor can help you review your compliance status and possible expenditures. You always have the choice to switch coverage options if your needs evolve.

Follow Changes in the Law

Monitor updates from the Texas Department of Insurance (TDI) and the Workers’ Compensation Bureau for changes to the rules and regulations. Workers’ comp recently underwent an overhaul, and regulations may change again in the future.

Stay Compliant With Mosey

Texas employers have many options regarding workplace accident, injury, or illness insurance. Compliance can be a hefty undertaking when so many choices are at play.

Mosey’s compliance management platform can help Texas employers track and manage state compliance issues like workers’ compensation and non-subscriber insurance requirements. Schedule a demo with Mosey to learn how we can help you stay on track.

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