Do I Need Workers’ Comp in Texas?

Texas is the only state where WC is optional for most private employers. Here’s what that actually means — and when you need it anyway.

Texas does not require most private employers to carry Workers’ Compensation insurance. But optional doesn’t mean consequence-free. Skipping WC in Texas comes with real legal and financial exposure that every contractor should understand before making the call.

The Texas Opt-Out Rule

Under Texas law, private employers can choose not to carry WC. These employers are called non-subscribers. Non-subscription is legal — but it removes several key protections that WC provides to employers.

When you’re a non-subscriber and an employee is injured on the job:

The employee can sue you directly in civil court
You cannot use the “fellow employee” or “assumption of risk” defenses
You bear the full cost of any judgment — out of pocket

The real risk of non-subscription: A single serious injury — broken back, lost fingers, hospitalization — can easily run $200K–$500K+. Without WC, that’s a direct hit to your business.

When You’re Required to Carry WC Anyway

Even in Texas, WC is mandatory in certain situations:

Government contracts — any work for a Texas state agency, county, or municipality typically requires WC
Construction contracts — many GCs require all subs to carry WC as a condition of the subcontract
Federal projects — federal contractors are required to carry WC under federal law
Certain regulated industries — motor carriers and some other industries have separate mandates

Check your contracts. Even if Texas law doesn’t require WC, your GC’s subcontract probably does. Showing up without it can get you pulled off a job.

Should You Carry It Even If It’s Optional?

Carry WC If:

You have employees doing physical work
You work on GC job sites
You bid government or commercial contracts
Your work involves height, tools, or heavy equipment
You can’t absorb a $200K+ injury claim

May Be Able to Skip If:

Solo operator with zero employees
Low-hazard work, office or light field exposure
Contracts don’t require it
You have a robust occupational accident policy instead

What About Sole Proprietors and Partners?

Sole proprietors and partners are typically excluded from WC coverage by default in Texas — meaning even if you buy a policy, it may not cover you as the owner unless you specifically opt in.

If you’re a solo contractor who gets hurt on the job, your WC policy (if you have one) covers your employees — not necessarily you. You’d need to elect coverage for yourself or carry a separate occupational accident policy.

What WC Actually Covers

Medical expenses for work-related injuries and illness
Partial wage replacement while an employee can’t work
Permanent disability benefits for serious injuries
Death benefits for surviving family members
Legal defense costs if an employee sues (subscriber status)

Subcontractor note: Uninsured subs who are injured on your job site may be pulled into your WC policy at audit — especially if a carrier or court determines they were functionally employees. Requiring subs to carry their own WC is the cleanest protection.

How Texas WC Rates Are Calculated

WC premiums in Texas are based on:

Payroll — higher payroll = higher premium
Classification code — your trade (roofing vs. painting vs. general carpentry) determines the base rate
Experience modifier (X-mod) — your claims history vs. industry average; clean record = lower mod = lower premium

Rates are filed with the Texas Department of Insurance. Carriers can deviate from filed rates, so shopping the market matters.

Not sure what you need?

Talk to a specialist. We can review your situation and quote WC alongside your GL — or help you understand your options as a non-subscriber.

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Call 210-640-7050