Texas Workers' Compensation Law: An “Opt-Out” State
When it comes to workers’ compensation, every state has its own set of laws and regulations. Though there are slight variations, most states require employers to have a workers’ compensation insurance policy to cover any costs such as lost income or medical bills should something happen to an employee while at work.
The exception to this general rule is the state of Texas. As such, it has been deemed by some an “opt-out” state. What does this mean in layman’s terms? It means that in Texas, employers are not required by state law or mandate to participate in the state’s workers’ compensation program; they are free to “opt-out” of it.
The main differences separating this Texan workers’ comp procedure from that of other states like Maryland, Virginia, and the District of Columbia, where we mainly practice, is that most states don’t have the choice to opt-out. In most states, if someone is injured on the job, they can file a claim. If their claim is approved, they are entitled to payment of their medical bills and monetary compensation to cover lost wages and disability.
If a worker in Texas is injured on the job with an employer who has opted-out, the injured worker only has the right to sue for civil damages. Here is the problem with that practice: it is common for uninsured employers in Texas to have the employee waive their right to sue. In exchange for the waiver, the employer promises to cover any medical bills incurred. Many employees take this deal because if they are injured, cannot work, and need medical attention, they have no way of paying for it while waiting to go to court.
Why is this relevant today? Most of us heard about or saw footage of the horrific explosion at the fertilizer factory in West Texas. Obviously never anticipating such a tragedy, the plant only had a $1 million insurance policy, an amount dwarfed by the medical bills and lost wages of those injured in this catastrophe. Since $1 million doesn’t come close to covering the damages, the company will file bankruptcy. Doing so will allow the company to pay out the $1 million insurance policy and no more.
In this case, the Texas employers have not only opted out of the state’s workers’ compensation, but by doing so have opted out of giving these innocent, hard working men and women the help and compensation they so desperately need. Allowing such lax workers’ compensation laws allows businesses and employers to walk away from their responsibilities to their employees when they need it most.
For many people, including those here at Ashcraft & Gerel, being responsible when your employees are injured at work is not something you can “opt-out” of. It is not only the right and decent thing to do, it is the national norm. All of the 49 other states require insurance coverage for employees.
Our thoughts and deepest sympathies are with those affected by the terrible explosion in West Texas. If you are reading this and live in Texas, think about contacting your state legislator. The law needs changing.