Workers’ compensation in Texas

Texas is the one state where workers’ compensation is not mandatory for most private employers. An employer may go without coverage and become a non-subscriber, which trades the statutory system for ordinary tort exposure. Texas also calculates temporary income benefits differently from most states, on a wage-difference basis.

The non-subscription option shapes every conversation in Texas. Declining coverage removes the exclusive-remedy protection that workers’ compensation buys, which means an injured employee can sue and the usual employer defenses are curtailed. Some large, well-capitalised employers make that trade deliberately. For a staffing agency placing workers on client sites under contracts requiring coverage, it is rarely available in practice.

The benefit formula is unusual. Temporary income benefits are paid at seventy percent of the difference between the pre-injury average weekly wage and what the worker can earn afterward, rather than as a straight fraction of the pre-injury wage the way most states do it. Partial return to work therefore changes the arithmetic continuously rather than in steps.

The benefit year runs October to September rather than on the calendar, so the maximum resets on a different cycle from most of the states an employer with multi-state payroll is tracking. It is a small thing that produces wrong numbers in year-end projections built on a calendar assumption.

For multi-state staffing operations, Texas payroll usually needs to be handled as its own workstream rather than folded into a national program, because the coverage decision, the benefit formula and the regulatory structure all differ from everywhere else on the schedule.

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