copyright © 2008 Donna C. Peavler
NONSUBSCRIPTION A Reasonable Alternative |
What is Nonsubscription?
Nonsubscription is the term used when an employer opts out of the Texas workers' compensation system and becomes a “nonsubscriber.”
Texas is unique in that it is the only state that does not mandate that private employers purchase workers' compensation insurance. Since
enacting the Texas Workers’ Compensation Act in 1913, Texas has allowed any private-sector employer the option to not purchase workers'
compensation insurance. Although a majority of Texas employers still subscribe to the workers' compensation system, in December 2006, the
Texas Department of Insurance reported that “Nonsubscribers continue to report higher satisfaction levels with their occupational benefit plans
than employers with workers' compensation coverage.”
Employers that do not subscribe to the Texas workers' compensation system—a/k/a “nonsubscribers”—encounter legal challenges different in
scope and kind than their subscribing counterparts. While companies that carry workers' compensation insurance can only be sued in limited
circumstances, nonsubscribing companies can be sued for any employee injury—whether the injury is real, imagined or even fraudulent.
Because the exposure to lawsuits statistically is the most significant factor when evaluating whether to subscribe to the Texas workers'
compensation system, a general understanding of the scope of a nonsubscribing employer’s potential liability is necessary to make informed
decisions about whether to carry workers' compensation insurance. And, once a company elects nonsubscription, a general understanding of a
nonsubscriber’s legal exposure is essential to managing, minimizing, and handling employee injury claims.
Nonsubscription is the term used when an employer opts out of the Texas workers' compensation system and becomes a “nonsubscriber.”
Texas is unique in that it is the only state that does not mandate that private employers purchase workers' compensation insurance. Since
enacting the Texas Workers’ Compensation Act in 1913, Texas has allowed any private-sector employer the option to not purchase workers'
compensation insurance. Although a majority of Texas employers still subscribe to the workers' compensation system, in December 2006, the
Texas Department of Insurance reported that “Nonsubscribers continue to report higher satisfaction levels with their occupational benefit plans
than employers with workers' compensation coverage.”
Employers that do not subscribe to the Texas workers' compensation system—a/k/a “nonsubscribers”—encounter legal challenges different in
scope and kind than their subscribing counterparts. While companies that carry workers' compensation insurance can only be sued in limited
circumstances, nonsubscribing companies can be sued for any employee injury—whether the injury is real, imagined or even fraudulent.
Because the exposure to lawsuits statistically is the most significant factor when evaluating whether to subscribe to the Texas workers'
compensation system, a general understanding of the scope of a nonsubscribing employer’s potential liability is necessary to make informed
decisions about whether to carry workers' compensation insurance. And, once a company elects nonsubscription, a general understanding of a
nonsubscriber’s legal exposure is essential to managing, minimizing, and handling employee injury claims.
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copyright © 2008 Donna C. Peavler
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Texas Nonsubscription. Answering your legal questions...