In Texas, you almost certainly are not legally required to carry workers compensation insurance. Texas is the only state where this coverage is elective (optional) for private employers, so there is no employee count that forces you to buy it. What Texas does instead is attach real civil consequences to skipping coverage, which is why most owners still carry it.
Who this is for: Any private Texas employer, from a first hire to a few hundred workers, trying to decide whether to buy workers comp or run as a "non-subscriber" (the state's word for an employer that opts out).
The short version
- Private Texas employers may choose to carry workers comp, but it is not required in most cases. The Texas Department of Insurance, Division of Workers' Compensation (TDI-DWC) says so plainly.
- There is no "N employees" trigger in Texas because there is no mandate to trigger. Part-time, seasonal, and family workers do not create one.
- If you opt out, you become a non-subscriber and lose your main legal defenses if an injured worker sues you.
- Non-subscribers still owe the state paperwork: a no-coverage notice, a posted employee notice, and injury reporting.
- Public employers and any contractor on a government building or construction contract are the narrow exceptions that must carry coverage.
What "non-subscriber" actually means
If you decline workers comp, Texas calls you a non-subscriber. You are not breaking the law by opting out, and the state will not shut you down for it. The trade-off is that you give up the legal protection that comp normally buys an employer, and you take on the paperwork the state requires of businesses that go without.
The single biggest thing you give up is your defense in a lawsuit. A subscribing employer generally cannot be sued in court by an injured employee at all, because workers comp is the employee's exclusive remedy. A non-subscriber can be sued for negligence, and in that suit the law strips away the three defenses an employer would normally rely on.
Carrying comp vs opting out, at a glance
| Question | You carry comp (subscriber) | You opt out (non-subscriber) |
|---|---|---|
| Can an injured worker sue you in court? | Generally no, comp is their exclusive remedy | Yes, for negligence |
| Can you argue the worker was partly at fault? | Not relevant, no lawsuit | No, that defense is removed by law |
| Can you argue the worker knew the risk? | Not relevant | No, that defense is removed |
| Can you argue a co-worker caused it? | Not relevant | No, that defense is removed |
| State filings you owe | Standard policy reporting | No-coverage notice, posted notice, injury reports |
The notices a non-subscriber still owes
Opting out does not mean doing nothing. If you go without coverage you must file a no-coverage notice with TDI-DWC (DWC Form-005): when you hire your first employee, again if you later drop coverage, whenever the agency asks, and on an annual basis. The exact filing deadlines are set out in the current DWC Form-005 instructions, so use the form to confirm your dates. You must post the "Notice to Employees Concerning Workers' Compensation in Texas" where staff can see it, and tell each worker whether you carry coverage. If you have five or more employees, you must also report work injuries that cost more than one day of lost time, plus job-related illnesses and deaths, on DWC Form-007. Skipping these filings, or misstating your coverage, is what actually draws a penalty in Texas.
Who does have to carry it
A few employers do not get the choice. Public employers, such as cities, counties, school districts, and state agencies, must provide coverage. So must any contractor and its subcontractors working on a government building or construction contract, who have to certify in writing that every worker on the public project is covered. If a private client or general contractor demands proof of coverage in a contract, that is a business requirement, not a state law, but it is just as binding on you.
A Houston example
Illustrative, not a quote. A Houston taqueria owner hires four kitchen and counter staff and wonders whether the law makes her buy workers comp. It does not, because Texas coverage is elective. She weighs going bare against carrying a policy. If a line cook slips on a wet floor and is badly burned, a non-subscriber owner could be sued for negligence with no ability to argue the cook was careless, and a single serious kitchen injury can cost far more than a year of premium. She also learns her landlord's lease and a catering client both require proof of coverage. She decides to subscribe, and asks us to shop the restaurant's class of work so the price reflects a small quick-service kitchen, not a full-service operation.
Real questions Texas owners ask
Is workers comp legally required for my Texas business?
In almost all cases, no. Texas is the only state where workers comp is elective for private employers, so there is no employee count that forces you to buy it. The main exceptions are public employers and contractors on a government building or construction contract.
What is a non-subscriber in Texas?
A non-subscriber is a private employer that chooses not to carry workers comp. It is legal to be one, but you lose your main legal defenses if an injured worker sues you, and you owe the state a no-coverage notice, a posted employee notice, and injury reports.
If comp is optional, why should I still buy it?
Because carrying comp makes it the employee's exclusive remedy, which generally means an injured worker cannot sue you in court. Without coverage, one serious injury can turn into a negligence lawsuit where you cannot argue the worker was at fault.
Do my part-time or seasonal workers make it required?
No. Because Texas has no headcount trigger for coverage, adding part-time, seasonal, or family workers does not create a mandate. Coverage stays optional no matter how many people you employ.
What happens if I opt out but skip the required notices?
That is where penalties come from in Texas. Failing to file the no-coverage notice, failing to post the employee notice, or misstating your coverage are administrative violations that can be fined, even though opting out itself is legal.
Does a client contract override the fact that comp is optional?
A private client or general contractor can require proof of coverage as a condition of the job. The state does not force you to buy it, but you cannot take that contract without meeting the requirement, so in practice the contract decides for you.
Do I have to carry comp on a government project?
Yes. Any contractor and its subcontractors on a government building or construction contract must certify in writing that every worker on the public project is covered. That is one of the few situations where Texas removes the choice.
Why Texas owners choose Morrow
- We shop the right market for you. Texas is the only state where workers' comp is optional for private employers, so Morrow helps you decide whether to subscribe or go without coverage, and places coverage fast through the competitive private market (or Texas Mutual, the insurer of last resort) when a client or public contract requires it.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Texas guides
Every Texas business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Texas (start here)
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Hiring your first employee: what changes
- What workers comp does not cover
- Texas restaurant workers comp
This guide is general information, not legal advice. Texas rules and penalty amounts can change, so verify current requirements with Texas Department of Insurance, Division of Workers' Compensation (TDI-DWC) or a licensed advisor before you rely on them. Last updated: July 2026.