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A History of Texas Non-Subscriber Law

Texas work injury law allows for companies to either subscribe to the state-run workers’ compensation plan or to opt out. Companies who opt out are classified as a “non-subscriber.”

The defining characteristic of non-subscribers is that, unlike companies who opt in to workers’ comp and are provided with lawsuit immunity, if a business is a non-subscriber, injured workers can sue them. With cases involving non-subscribers, an employee has all of the normal common law rights and remedies that exist in personal injury cases.

In this article, we’ll discuss the history of the the laws regarding non-subscriber employers and how this all affects the rights of a worker who has been injured on the job.


Questions answered on this page:

  • What is the difference between workers’ compensation subscribers and non-subscribers?
  • What is the history behind non-subscriber law?
  • How can a lawyer help me in a non-subscriber work injury case?

Workers Compensation Subscribers vs Non-Subscribers

When it comes to workers’ compensation, there are two types of cases:

  • Workers’ Compensation Case (AKA workman’s comp) – Meaning that the injured workers’ rights are limited to recovering benefits afforded to him by the Workers’ Compensation Act of 1993 (since then updated and modified). The primary significance of an injured worker having a workers’ comp case is that they are incredibly limited in their recovery and are not eligible to file suit against the employer.

    OR

  • Non-Subscriber Case – Meaning that the employer does not subscribe to workers’ compensation coverage. As such, the employee can sue the employer and has all of their normal common law rights and remedies.

Non-subscriber claims are more than just a claim based on an absence of workers’ comp coverage. In fact, specific statutes in the Texas Labor Code grant permission for non subscriber claims in the first place, and shape the nature of the defenses that employers are able to use against injured workers who file non-subscriber cases. To really understand and appreciate where these laws come from, it is helpful to have an understanding of the history of Texas’ work injury laws.

Background of Texas Work Injury Law

Many years ago, an injured employee had what amounted to a natural right to sue their employer for damages if their injury was caused by the employer’s negligence. Such a natural right to sue is considered to be a common law right. There was no specific statute that gave the insured worker a right to sue; the rights and remedies afforded to the injured worker were borne of precedence established in previous cases. As such, when an occupational injury occurred, the employee could file a lawsuit and pursue the employer through court in order to obtain an award of compensation.

But these common law-based cases left room for interpretation as to whose fault an accident was and whether or not the company should be liable. More specifically, in cases where there was an argument that the employee caused or contributed to their own injury, a clear cut answer was not always available and lengthy litigation ensued.

Some argued that an employer should always be liable for an employee’s on-the-job accident since the employee was hurt while helping the company to profit and the employer was arguably in a much better stance to afford the cost of treating the injury. Conversely, others believed that an employer should be liable if the worker was hurt due to the employer’s negligence, but the employer should not be liable if the worker was injured by their own personal negligence.

Needless to say, amidst the horrid working conditions of the early 1900s, this resulted in a multitude of work injury lawsuits that were heard by Texas juries. It wasn’t long before the companies being sued sought some reprieve from these lawsuits and they beseeched our state’s legislature for help.

Our legislature drafted early workers’ compensation laws that were designed to limit an injured workers’ access to the courts while, in exchange, offering the injured worker a more clear-cut path to compensation that would theoretically do away with the need for court battles and would provide the employee some piece of mind in knowing that compensation would be more or less guaranteed. These laws evolved over time and were ultimately heavily modified with the Workers’ Compensation Act of 1993.

Reforming the Texas Labor Code

In an effort to clarify and mainstream the recovery process, Texas established a new set of workers’ compensation laws. This new code was based on the concept of providing workers with immediate and automatic compensation for workplace injuries, thereby eliminating the need for filing a lawsuit. Under this new code, everything was to be handled through an administrative process and employees were pretty much guaranteed compensation, as opposed to having the right to file a claim in tort against the employer, and having to rely upon a judge and jury to force the employer’s hand. In theory this is not a bad plan. In practice, however, it has proven to be tremendously inequitable, biased against workers, monetarily speaking, and flies in the face of work safety as a matter of public policy.

The Subtext of The Workers’ Compensation Act

What is rarely discussed, but seems fairly obvious to attorneys in our position, is that the Workers’ Compensation Act of 1993 did far more to protect negligent companies from lawsuits than it did to help employees. Sure, the alleged benefit of eliminating an employee’s right to sue in exchange for guaranteed compensation sounds good at first glance, but less so when you consider that the supposed guaranteed compensation provided to an employee is usually substantially less than what a jury would award if the employee had the option to take his case to trial.

To put it another way, the law can be interpreted to state, “We have decided that it is better to give an employee less than fair compensation, but we’ll make it easier for him to obtain that compensation.” How big of an outrage you see this as depends on how important a person’s right to obtain equitable justice is to you. By our estimation, the ability to pursue fair compensation is a cornerstone of democracy, and we can never fathom being able to entirely justify taking away another person’s rights and exchanging it with something that is less than fair.

But there’s more to it than that. Many employers in Texas don’t feel that they need workers’ comp coverage. Office jobs and sales jobs, for instance, feature a low chance of injury. So why should any of these companies be forced to buy workers’ compensation coverage? The lobbyists for the insurance industry argued that all businesses should be required to buy WC coverage, yet many Texas business owners did not feel this was appropriate. They actually preferred to be able to resolve such claims in court so that they would only be liable for injuries when they were truly negligent as opposed to paying for all injuries that occurred on the job, even those that the company had no hand in creating. Under pressure from businesses who truly desired the opportunity to reject WC coverage, lawmakers were forced to include language that would allow businesses to opt-out of WC coverage.

You can see here that the law that was ultimately passed allows for employers to opt out of comp coverage:

Sec. 406.002. COVERAGE GENERALLY ELECTIVE:

  • (a) Except for public employers and as otherwise provided by law, an employer may elect to obtain workers’ compensation insurance coverage.
  • (b) An employer who elects to obtain coverage is subject to this subtitle.
  • Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

But, perhaps of greater importance, is the fact that lawmakers also included provisions which made it easier for injured workers to sue by disallowing the employer to use certain common law defenses:

Sec. 406.033. COMMON-LAW DEFENSES; BURDEN OF PROOF:

  • (a) In an action against an employer by or on behalf of an employee who is not covered by workers’ compensation insurance obtained in the manner authorized by Section 406.003 to recover damages for personal injuries or death sustained by an employee in the course and scope of the employment, it is not a defense that:
    • (1) the employee was guilty of contributory negligence;
    • (2) the employee assumed the risk of injury or death; or
    • (3) the injury or death was caused by the negligence of a fellow employee.
  • (b) This section does not reinstate or otherwise affect the availability of defenses at common law, including the defenses described by Subsection (a).
  • (c) The employer may defend the action on the ground that the injury was caused:
    • (1) by an act of the employee intended to bring about the injury; or
    • (2) while the employee was in a state of intoxication.
  • In an action described by Subsection (a), the plaintiff must prove negligence of the employer or of an agent or servant of the employer acting within the general scope of the agent’s or servant’s employment.
  • (e) A cause of action described in Subsection (a) may not be waived by an employee before the employee’s injury or death. Any agreement by an employee to waive a cause of action or any right described in Subsection (a) before the employee’s injury or death is void and unenforceable.
  • (f) A cause of action described by Subsection (a) may not be waived by an employee after the employee’s injury unless:
    • (1) the employee voluntarily enters into the waiver with knowledge of the waiver’s effect;
    • (2) the waiver is entered into not earlier than the 10th business day after the date of the initial report of injury;
    • (3) the employee, before signing the waiver, has received a medical evaluation from a nonemergency care doctor; and
    • (4) the waiver is in a writing under which the true intent of the parties is specifically stated in the document.
  • (g) The waiver provisions required under Subsection (f) must be conspicuous and appear on the face of the agreement. To be conspicuous, the waiver provisions must appear in a type larger than the type contained in the body of the agreement or in contrasting colors.
  • Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 2001, 77th Leg., ch. 1456, Sec. 16.01, eff. June 17, 2001.
    Amended by:

    • Acts 2005, 79th Leg., Ch. 265 (H.B. 7), Sec. 3.031, eff. September 1, 2005.
    • Acts 2011, 82nd Leg., R.S., Ch. 1108 (S.B. 1714), Sec. 1, eff. September 1, 2011.

So What Does This Mean?

This section of the Texas Workers’ Compensation Code basically outlines all of the defenses which a non-subscriber cannot claim in a lawsuit brought by an injured worker since the employer deliberately chose not to purchase workers’ compensation coverage. This section also applies in the event that the employee died and a wrongful death lawsuit is brought by the employee’s estate or surviving family members. The employer cannot argue that the employee was partially at fault, that the employee assumed the risk of injury since they knew their job was hazardous or dangerous, or that the accident was caused by another employee’s negligence or carelessness. Therefore, if an injured worker chooses to sue their non-subscriber employer for an on-the-job injury the employer cannot deny liability based on any of these previous arguments because such defenses that would be available in any other normal common law case are expressly forbidden according to the statute.

Taken as a whole, the law basically says, “Sure, we’ll let you opt out. But if you do, we’ll make it that much easier for injured workers to sue you and beat you in court.”

Naturally, all of the theories of negligence that are used by work injury lawyers in a non-subscriber case are based on common law principles. Taken as a whole, this makes non-subscriber cases a unique subsection of tort law whereby the ability to bring the claim is derived from laws that were originally designed to eliminate such cases altogether, the manner by which the cases are defended is limited by statute, yet the plaintiff’s allegations or negligence and remedies are based on common law principles.

The Attorneys at Grossman Law Offices Are Experienced in Non-Subscriber Law

Texas work injury law has evolved over time, and it is important to have an attorney who understands non-subscriber work injury law if you have been injured while working for an employee who is a non-subscriber. The work injury attorneys at Grossman Law Offices, based in Dallas, TX, have been handling non-subscriber work injury lawsuits for over 25 years. If you have any questions about your work place injury, call us at (855) 326-0000 for a free consultation.


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