A Texas nonprofit is not legally required to carry workers compensation insurance for its employees. Texas is the only state where coverage is elective (optional) for private employers, and a private nonprofit is treated like any other private employer, so paid staff do not trigger a mandate. What usually drives a nonprofit to buy comp is not the law, it is the grants, contracts, and public funding that require it.
Who this is for: Directors and operators of Texas nonprofits, from an all-volunteer group to a charity with paid program and administrative staff.
The short version
- A Texas nonprofit may choose to carry workers comp, but it is not required in most cases.
- Tax-exempt status does not change this; the elective rule applies to private nonprofits the same as to for-profits.
- Volunteers are generally not employees, so a nonprofit with only volunteers often has no one for comp to cover.
- Grants, government contracts, and building leases frequently require a nonprofit to carry a policy.
- Opting out makes the nonprofit a non-subscriber that can be sued for negligence without its usual defenses.
Employees, volunteers, and coverage
Workers comp covers employees, not volunteers, so the first question for a nonprofit is who is actually on payroll. An all-volunteer organization frequently has no employees to insure, which is one reason many small charities do not carry comp. Once a nonprofit hires paid staff, coverage is still optional in Texas, but the injury exposure is real, and a paid coordinator hurt on the job is exactly what comp is designed to handle. If you want volunteers protected, that is usually addressed through other coverage, such as accident insurance, not workers comp.
What often makes a nonprofit buy anyway
| Situation | Is comp required by law? | Why coverage often happens |
|---|---|---|
| All-volunteer, no paid staff | No | Often no employees to cover; other coverage handles volunteers |
| Paid program or admin staff | No | Optional, but employee injuries and lawsuit exposure are real |
| Receives a government grant or contract | Often required by the funder | Funders and contracts commonly require proof of coverage |
| Leases program space | Often required by the landlord | Commercial leases frequently require a policy |
The lawsuit risk if you opt out
A nonprofit that opts out is a non-subscriber, just like any other Texas employer. If a paid employee is injured and the organization carries no comp, the worker can sue for negligence, and the law strips the nonprofit of its defenses that the worker was at fault, knew the risk, or was hurt by a co-worker. A judgment there comes straight out of the mission's budget. Carrying comp makes it the employee's exclusive remedy and generally blocks the lawsuit, which is why a nonprofit with paid staff usually subscribes even though the state does not require it.
An El Paso example
Illustrative, not a quote. An El Paso youth-services nonprofit runs mostly on volunteers but employs two paid program coordinators. It wins a city grant that requires proof of workers comp for all paid staff, so it buys a policy covering the two coordinators. The volunteers are handled separately through accident coverage. When a coordinator trips carrying supplies at an event, comp pays the medical bills and the nonprofit keeps its exclusive-remedy protection instead of facing a claim against its grant-funded budget. We help the organization rate its clerical and program payroll correctly so the premium fits a small staff.
Real questions Texas owners ask
Does my Texas nonprofit have to carry workers comp?
In most cases, no. A private nonprofit is treated like any other private employer, and coverage is elective in Texas, so paid staff do not make it mandatory. Grants and contracts are what usually require it.
Does tax-exempt status change the workers comp rules?
No. Being a tax-exempt nonprofit does not change the elective rule. A private charity gets the same choice as a for-profit business, subject to the same non-subscriber consequences if it opts out.
Do we need comp if we only have volunteers?
Usually not. Workers comp covers employees, not volunteers, so an all-volunteer group often has no one for comp to cover. Volunteer injuries are typically handled through other coverage like accident insurance.
Why do our grants require workers comp if the state does not?
Funders and government contracts often require proof of coverage to protect themselves and the people the program serves. The state may not require comp, but you usually cannot accept the grant without it.
What happens if our nonprofit opts out and a staffer is hurt?
The nonprofit becomes a non-subscriber and can be sued for negligence, with its usual defenses removed by law. A judgment would come out of the mission's budget, which is why nonprofits with paid staff usually carry comp.
Can we cover our volunteers with workers comp?
Generally no, because comp covers employees. To protect volunteers, nonprofits usually add other coverage, such as volunteer accident insurance, rather than relying on a workers comp policy.
Do our board members count as employees for comp?
Unpaid board members are generally not employees, so they are not covered by workers comp. If a board member is also a paid staff member, their paid role is what a comp policy would address.
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?
- 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 nonprofit 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.