The Lone Star State is unique for many reasons. One of them is the way it handles workers’ compensation. Texas is the only state in the U.S. where most businesses don't have to purchase workers’ compensation insurance.
But that doesn’t mean it’s not a good idea to have it. If you are a business owner, you know that workers’ compensation protects your employees from the costs associated with work-related injuries or illnesses. But did you know it also protects you and your business?
Having workers’ compensation insurance means, in most cases, that your employees cannot sue you if they are injured on the job. For a small business, all it might take is a single lawsuit to devastate your bottom line. So protecting yourself from that kind of legal action makes a great deal of sense.
Let’s take a deeper look into workers’ compensation in Texas and what you need to know to make your own decision on purchasing a policy.
How Does Workers’ Compensation Work in Texas?
Businesses in Texas aren’t required to get workers’ comp unless they contract with the government. Then they’ll need to insure the employees working on those projects. Also, contractors in Texas can require their subcontractors to get workers’ comp.
Texas workers’ compensation is designed to do several things:
- Pay for an injured employee’s medical care if they are in an accident or become ill because of a workplace situation.
- Replace a part of the injured worker’s income if they are unable to work.
- Pay death benefits if a worker is killed while on the job.
- Protect employers from the consequences of potentially disastrous lawsuits filed by injured workers.
That’s a tall order, but workers’ comp is overseen by the Texas Department of Insurance (TDI) Division of Workers’ Compensation (DWC). There are laws and rulings in place to ensure that every job injury or illness is handled fairly for both the worker and the employer, as well as for the insurance company that handles the claim. Workers’ compensation law is codified in the Texas Workers Compensation Act, which is part of the Texas labor code.
Who Do I Contact for Workers’ Comp in Texas?
To purchase a policy, your first stop will probably be with your insurance broker. They can answer any questions you have about workers’ comp and get you set up with a policy that is customized for your particular needs. But how much will a policy cost?
There are multiple factors that your insurer will take into account when determining your premiums, such as the number of employees you have and your business code. Larger companies will probably pay more, as will those with a higher risk of injuries, such as construction or forestry. Most small businesses, however, will pay less than $100 a month for coverage.
For small businesses, it can pay to work with a company such as Hourly, which can help you manage your payroll and pay workers’ comp in an easy-to-use app.
What Do You Do If an Employee Gets Injured?
Of course, the first action following an accident or injury should be obtaining any needed medical treatment for the injured worker. In some cases, they may be able to go to their personal care physician (PCP) for treatment, but in other cases, their employer may be part of a healthcare network. If that is the case, the employee will need to be seen by medical professionals within the network.
According to Texas workers’ compensation law, an employee has 30 days to give notice of a work-related injury or illness to their employer. Texas employers should notify their insurer within eight days of learning of the injury. Meanwhile, both employers and employees have one year to file a formal claim with the state.
Once the workers’ compensation claim has been filed, there are several possible ways it could be resolved. If it is approved, the most immediate result will be medical benefits for the employee. These benefits should cover all medical costs deemed necessary by your insurance carrier and the medical professionals involved.
Other workers’ compensation benefits include partial payments to the employee to make up for lost wages if they are unable to work due to their injury. This benefit amount is based on their average weekly wage for the 13 weeks prior to their injury. The employer will need to submit a wage statement to the insurer to determine this. There are several types of wage benefits:
- Temporary income benefits: These kick in when the worker has lost income due to being absent from work for more than seven days because of the injury. The insurer will pay 70 to 75 percent of the employee’s wages in this case. This benefit ends when the employee returns to work and their pay equals what it was before the injury, or, alternatively, what it is on the day the worker reaches their maximum medical improvement. This term, often called MMI, is the date at which the doctor believes that no further healing or recovery can be expected.
- Impairment income benefits: These occur once the employee has reached MMI and their personal injury is considered permanent. It equals 70 percent of the worker’s wages. The benefit is not contingent on the employee’s ability to work; it merely states that there are permanent consequences of the injury or illness that render them unable to do the job they did prior to the accident.
- Supplemental income benefits: These are paid to workers whose injuries are serious enough that they are unable to return to work, or have returned but are earning less because of the injury. Their doctor will assign an impairment rating to them, which must be 15 percent or more to qualify for this benefit.
- Lifetime income benefits: These benefits are paid out when the worker sustains a serious injury that means they are unable to work. This might include things like blindness or a traumatic brain injury. This benefit gives them 75 percent of their average wage plus a 3 percent cost-of-living increase every year. It has no time limit and may be paid until the employee’s death.
- Death benefits: If a worker loses their life on the job, these benefits are paid to the family. They equal 75 percent of the lost wages as well as up to $10,000 in funeral costs.
What Does Workers’ Compensation Not Cover?
Workers’ compensation insurance coverage is designed solely to cover accidents or injuries that happen within the course of an employee’s job. If the accident is not in some way job-related, the employee’s personal health insurance coverage should kick in to pay their medical costs.
Are there other exceptions for getting covered under Texas workers’ comp? Here are a few:
- If the accident was the result of horseplay or physical fighting on the part of the employee
- If the injury happened during an act of criminal activity or self-injury
- If the employee was intoxicated or high on drugs at the time of the accident
- If the accident happened during the employee’s voluntary participation in an off-duty recreational activity sponsored by their employer, such as a softball game
- If the accident was part of a third party’s criminal act that was directed against the employee for a personal reason unrelated to work
- If the accident was caused by an “act of God.” This term refers to any accident or natural event that was not caused by human intervention and could not have been prevented, such as a naturally occurring fire or storm
Can You Work While on Workers’ Comp in Texas?
If an employee has a total disability, either for a short time or permanently, they cannot return to work, even if their job is modified.
If it is determined they have a partial disability, however, they may be able to return to work, even if their job has to be modified. So, someone who has injured their leg in a fall might be able to manage duties that require them to sit at a desk.
The injured employee who undertakes a modified position is eligible for two-thirds of the difference between what they were making before the injury and what they are making in the modified job. If their partial disability is permanent, that benefit can last as long as they work.
If the injury is such that the employee is unable to return to work for the same company, workers’ comp insurance may pay for vocational training or education to allow the employee to resume work in a different occupation. So, for example, a construction worker who injures his back and is unable to work in the field may receive financial assistance to become an IT engineer.
Employee FAQ: What Your Workers Should Know
Your employees may come to you with questions regarding Texas workers’ comp—or you may have basic questions yourself. Here are common queries your workers may have, no matter where you’re located in Texas, from Houston to San Antonio.
How do I apply for workers’ compensation?
Employees have 30 days to report an injury to their employer once they get hurt (or realize they have a work-related injury). Employees also need to file paperwork with the state—and they have one year to file a claim with the Texas Division of Workers’ Compensation, using DWC Form 041. This form is called Employee’s Claim for Compensation for a Work-Related Injury or Occupational Disease. It can be found under the employee forms link on the website for the Texas Division of Insurance workers’ comp page. This page also provides other helpful information for anyone dealing with an injury.
Do I fill out DWC Form 041 myself?
The person who was injured should fill out the form if they are able; if not, they can ask for help from a family member or friend. They should also, however, tell their employer about the accident as soon as possible, as the employer will likely be contacted for further information by their insurance company.
How long will it be until I receive wage benefits?
If you lose wages because of your injury, temporary income benefits (TIBs) will start after you have lost seven days of work. Benefits are not paid for the first week unless your injury has led you to lose more than two weeks of work. TIBs end when one of these three things happens:
- A medical professional determines that you have reached maximum medical improvement, or you can no longer heal any further.
- You are able to earn the average amount of wages that you did before you were hurt.
- You reach the end of the TIB benefits period, which is 104 weeks after your eighth day of disability.
Will all my medical bills be paid?
Yes, if your claim is approved, your medical bills will be paid for as long as your insurer and health care professionals determine that you need care. Your health care providers will bill the insurer rather than you for your workplace injury.
Can I use my own doctor for a work-related claim?
It depends on whether your employer has a healthcare network. If they are in a network, you must use a doctor that participates in that network. You may not receive benefits if you go outside the network. If you are not covered by a network, you have the right to choose a doctor, if that doctor is qualified to treat claims. The TDI has a list of healthcare practitioners who are restricted from treating claims that may be helpful to you.
What happens if I’m injured and my employer doesn’t have insurance?
Companies that don’t carry policies are called nonsubscribers. They are required to inform all employees that they are not part of the workers’ compensation system. Some employers, if they are large enough, may be self-insured. If not, however, a nonsubscriber may be sued by an injured employee if that employee can prove that the company is at least one percent at fault for the injuries. A lawsuit can also include lost wages and past and future medical costs, as well as payment for the pain and suffering caused by the injury.
Protect Yourself, Your Company, and Your Employees with Workers’ Comp in Texas
Although you are not required to have workers’ compensation insurance in Texas, most companies do carry a policy. Why? Because it’s a true win-win. For a reasonable monthly cost, you protect your business from the risk of a high-cost lawsuit if one of your employees is injured.
If you don’t have a policy, consider talking to your insurance broker or agent to find a policy that fits your needs. If you do have workers’ comp, all that’s left to do? Schedule a time to go over your policy with your agent, to be sure it still fits your needs.