“Nonsubscribers”: What happens when you aren’t covered by workers’ compensation?

In 49 states, most or all employers are required to participate in a workers’ compensation program to provide benefits to employees injured on the job. In Texas alone, it is entirely up to the employer whether to provide workers’ compensation benefits to employees. Employers who chose not to are called “nonsubscribers.” So, if you are injured on the job, what is the difference between having an employer with workers’ compensation and having an employer who is a “nonsubscriber”?

If you are covered by workers’ compensation and are injured on the job, then your employer’s workers’ compensation insurance carrier (or the employer itself if it is “self-insured”) must pay for medical care necessary to treat your injury and must pay a portion of the wages you lose while unable to work due to the injury. These payments must be made regardless of who was at fault for the injury. As a trade-off for receiving these “no fault” benefits, you may not normally sue your employer for your injuries even if your employer was at fault, with very narrow exceptions. Also, while you may sue other individuals or businesses who may be at fault for your injuries (these are called “third-party claims”), your workers’ compensation carrier will be entitled to be reimbursed out of any settlement for some or all of any settlement received from a third party.

If your employer is a nonsubscriber, then you are not entitled to any workers’ compensation benefits, though your employer may provide some other form of accident insurance or injury benefits. However, if your employer was wholly or partially at fault for your injuries, you may sue your employer for damages.

While the damages you may recover in a negligence lawsuit against your employer may be greater than the benefits you would have received from workers’ compensation, it will be necessary for you to prove that your injuries were caused by the negligence of your employer or fellow employees. Establishing your employer’s liability not always a simple task, and may require lengthy litigation during which time your employer has no obligation to pay your medical bills or lost wages.

Some groups which advocate employers opting out of workers’ compensation in Texas claim that those employers do so in order to “have more control over benefits,” and to “take better care of their employees.” In my experience, this is rarely the case. Employers who choose to be nonsubscribers tend to come in one of two flavors: Small businesses with few assets that either cannot afford workers’ compensation or do not fear being sued by employees because they are “judgment proof” (meaning they have few or no assets against which a judgment may be satisfied); and large businesses with special legal protections against suits by employees.

For example, private hospitals often do not carry workers’ compensation insurance for their employees. While this theoretically would expose the hospital to suits by injured nurses and other employees, the Texas Supreme Court has recently ruled that such claims are “health care liability” claims that are subject to the same procedural hurdles and damages caps as medical malpractice claims under the Texas tort reform statutes. Another example is large retail companies who require their employees to sign arbitration agreements. While the Texas Arbitration Act prohibits employers from requiring employees to arbitrate their injury claims, the Federal Arbitration Act, which preempts Texas law when the business is engaged in interstate commerce, allows such arbitration provision. In that case, the injured workers not only do not receive workers’ compensation benefits, but are also deprived of their day in court and must present their claims instead to a private arbitrator.

Workers who are injured on the job face some unique legal hurdles to obtaining compensation for their injuries. If you or someone you know has been injured at work through another’s negligence or wrongdoing, whether or not you are covered by workers’ compensation, contact an attorney at Abraham, Watkins, Nichols, Agosto, Aziz & Stogner by calling (713) 222-7211 or 713-222-7211.