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Texas Workers Compensation | What Most Business Owners Don’t Know (Penalties for not knowing up to $500.00 a day)
Texas workers compensation permits Texas business owners to elect non-subscriber status rather than maintain coverage. Non-subscriber status does not remove the requirement to notify the state of coverage decisions each year. Employers must file annual reports of their coverage status with the state under Texas rules.
Written and reviewed by Steve White, Owner, NPN License#: 19284005 · Initially published September 22, 2026
That’s right, the state can issue penalties to employers who reject Workers’…
That’s right, the state can issue penalties to employers who reject Workers’ Compensation and fail to notify the State each year. The employer may be assessed a penalty up to $500 for each day of non-compliance.
Are you totally lost?
Let me back up for a second and tell you the good news. Texas is (for the most part) the only State that allows the business owner to elect NOT to carry workers comp. Now, that doesn’t mean you shouldn’t carry workers comp, but the fact that TX gives most employers the option to carry workers comp is considered by some to be a big competitive advantage we have over other States.
But it isn’t as simple as choosing not to carry workers comp and sitting around doing nothing about it. No, the State has requirements for business owners to fulfill annually if an employer elects to remain out of the workers comp system. If you, as the employer, opt out, you are considered a non-subscriber. And as a non-subscriber, you are required (that’s right required) to:
Key takeaways
- 1Notify the State you do or do not have coverage
- 2Notify the State when/if you terminate coverage
- 3Post notices, with exact wording, in the work place
- 4Notify new employees of the absence of coverage
- 5Notify existing employees of coverage termination
- 6Notify employees how to file claims
- 7Many employers must have drug prevention programs
Here are some links provided by the State to explain more about the obligations…
Here are some links provided by the State to explain more about the obligations of the employer.
1. General Info for Non-Subscribers:
https://www.tdi.texas.gov/pubs/consumer/cb007.html
2. DWC Form 5- Required for all Non-Subscribers:
https://www.tdi.texas.gov/forms/dwc/dwc005nocov.pdf
So, digest this first and then consider that the TX marketplace offers an alternative to traditional workers comp, kind of a middle ground to carry traditional workers comp and not having any coverage. There are some significant coverage differences, but it can be a better alternative than not carrying coverage at all. At the same time it can be less expensive than traditional workers comp as well. These policies are often referred to as Occupational Accident policies.
We will discuss those in another blog post. In the meantime we encourage you to digest this information, give strong consideration to your individual circumstances and make an informed decision about the coverage that’s right you and your business by utilizing a good agent that can help you navigate through the process.
References:
https://www.texasnonsubscriber.com/faqs.html
https://www.tdi.texas.gov/consumer/wc.html
DISCLAIMER-Choosing to carry workers comp or not carry workers comp is a serious decision that can impact the employer, employees, and families of both. Understanding the options and taking time to make an informed decision is highly recommended.
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Editorial standards
Written and reviewed by Steve White, Owner, NPN License#: 19284005, Steve White Insurance Group.
Steve White is an experienced independent insurance agent specializing in personalized coverage solutions, risk evaluation, and multi‑carrier underwriting. He operates stevewhiteinsurance.com, serving clients across Highland Village and the greater DFW area with fast, precise, and highly structured guidance. His expertise includes home, auto, commercial, and specialty insurance lines, with a focus on clarity, efficiency, and long‑term protection strategies. Outside of his insurance practice, Steve is deeply involved in youth baseball, fishing, travel planning, and cooking. He is known for a direct, fast‑paced communication style and a preference for organized, actionable workflows.
Published September 22, 2026. See our editorial process. How we use AI.