In Texas, choosing not to carry workers compensation is legal, so there is no stop-work order or automatic fine just for going without. The consequences are different in Texas: you lose your legal defenses if an injured worker sues you, and you take on state paperwork that carries penalties if you ignore it. That combination is what makes going bare risky even though it is allowed.
Who this is for: Texas employers weighing whether to opt out of workers comp, and owners who already operate as a non-subscriber and want to know their real exposure.
The short version
- Texas does not shut down or automatically fine a business just for not carrying comp.
- The main consequence is civil: a non-subscriber sued by a hurt worker loses its usual legal defenses.
- You must file a no-coverage notice, post an employee notice, and report qualifying injuries.
- Missing those filings or misstating your coverage can draw administrative penalties of up to a set daily amount.
- One serious injury lawsuit can cost far more than years of the premium you skipped.
The lawsuit consequence comes first
The biggest penalty for going without comp in Texas is not a government fine, it is a courtroom. If an employee is injured and you are a non-subscriber, the worker can sue you for negligence, and the law removes the three defenses an employer would normally rely on. You cannot argue the worker was partly at fault, that the worker knew the risk, or that a co-worker caused the harm. The employee only has to prove your negligence. A pre-injury agreement waiving this right is void, so you cannot contract your way out of it in advance.
The filings and fines
| Obligation | What it is | Risk if you skip it |
|---|---|---|
| No-coverage notice (DWC Form-005) | Tell the state you do not carry comp, on a set schedule | Administrative violation subject to penalty |
| Employee notice | Post that you have no coverage and tell each worker | Administrative violation subject to penalty |
| Injury reporting (DWC Form-007), if you have five or more employees | Report injuries with more than a day of lost time, plus illnesses and deaths | Administrative violation subject to penalty |
| Truthful coverage statements | Do not misstate whether you carry comp | Misrepresentation is a penalized violation |
How the penalties actually work
Because coverage is optional, the state's enforcement targets the reporting and notice duties, not the choice to opt out. The Texas Department of Insurance can assess administrative penalties for those violations, up to a set daily amount per violation, with each day of noncompliance treated separately, after a chance for a hearing. In plain terms, you will not be fined for being a non-subscriber, but you can be fined for not filing your no-coverage notice, not posting the employee notice, not reporting a serious injury when you are required to, or telling anyone you carry coverage when you do not. The largest cost, though, usually remains the negligence lawsuit that one bad injury can bring.
A Texas roofing example
Illustrative, not a quote. A Corpus Christi roofing company operates as a non-subscriber to save premium and never files its no-coverage notice or posts the employee notice. A roofer falls and is seriously hurt. The company faces a negligence lawsuit in which it cannot argue the worker was careless or knew the risk, and it also draws administrative penalties for the notices it never filed. The combined cost dwarfs the premium it avoided. After the claim, the owner subscribes, and we help place coverage and rate the roofing payroll correctly so the price reflects the actual work.
Real questions Texas owners ask
Is it illegal to not have workers comp in Texas?
No. Opting out is legal because Texas coverage is elective. There is no stop-work order or automatic fine just for being a non-subscriber, but there are real civil and paperwork consequences.
What is the main penalty for going without comp in Texas?
The main consequence is civil, not a fine. A non-subscriber sued by an injured worker loses its usual defenses and cannot argue the worker was at fault, knew the risk, or was hurt by a co-worker.
Can Texas shut down my business for not carrying comp?
No. Because coverage is optional, the state has no authority to issue a stop-work order for being a non-subscriber. Enforcement focuses on the notices and reports you owe, not the choice itself.
What paperwork does a non-subscriber have to file?
You must file a no-coverage notice with the state on a set schedule, post an employee notice and tell each worker, and, if you have five or more employees, report injuries with more than a day of lost time along with illnesses and deaths.
Can I be fined as a non-subscriber in Texas?
Yes, but for the paperwork, not the opt-out. Failing to file the no-coverage notice, failing to post the employee notice, failing to report a serious injury, or misstating coverage can each draw administrative penalties.
Can I have workers sign away their right to sue me?
Not in advance. A pre-injury waiver of an injured worker's right to sue a non-subscriber is void under Texas law, so you cannot contract your way out of the exposure before an injury happens.
Is going bare cheaper than carrying comp?
Only until something goes wrong. Skipping premium saves money in the short run, but one serious injury lawsuit, plus any penalties for missed filings, can cost far more than years of coverage.
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)
- Workers comp: the owner's overview
- 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?
- 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)
- Workers comp vs employers liability
- What workers comp does not cover
- Texas roofer 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.