What Happens If You Don’t Have Workers Comp in Texas?

Short Answer: You lose every legal defense if an employee gets hurt. No arguing they were careless. No arguing they knew the risks. No arguing a coworker caused it. Your employee can sue you directly for medical bills, lost wages, pain and suffering, mental anguish, and physical impairment—with no cap on damages. One injury can end your business.

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The Immediate Consequences

The moment you decide to go without workers’ comp in Texas, you become what the law calls a non-subscriber. That’s not just a label. It’s a legal status that strips away protections most employers take for granted.

Texas is the only state where private employers can legally opt out of workers’ compensation entirely. You can run a business with employees and carry zero coverage. It’s not illegal.

But the Texas Department of Insurance is blunt about what happens next: employers without coverage lose protection from most lawsuits by injured workers. And in court, you can’t use three defenses that normally protect businesses.

The trade-off is simple: You save on premium. You expose yourself to unlimited liability.

According to the Texas Legislature’s bill analysis, an employer that opts out “may be sued by its employees for damages based on employer’s negligence related to an on-the-job injury.” That’s the legal reality. No buffer. No cap. No protection.

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Lawsuits: What Your Employee Can Actually Recover

Without workers’ comp, your employee’s injury becomes a personal injury lawsuit against you.

Let’s say your helper falls off a ladder while running pipe. Breaks his wrist. Needs surgery. Can’t work for three months.

With workers’ comp:

• His medical bills are paid
• He gets income benefits while recovering
• You don’t get sued

Without workers’ comp:

• He sues you
• You pay for your own lawyer
• You pay whatever the jury decides

Here’s what he can recover in a Texas civil lawsuit:

• Medical expenses (past and future)
• Lost wages during recovery
• Lost future earning capacity
• Pain and suffering
• Mental anguish
• Physical impairment
• Disfigurement (in serious injury cases)
• Punitive damages (in egregious cases)

Workers’ comp caps income benefits at 70% of wages and covers medical care. A jury is not bound by those caps.

One back injury. One fall. One surgery. That’s a six-figure lawsuit in Texas.

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The Defenses You Lose

Under Texas Labor Code Section 406.033, a non-subscriber cannot use these three defenses in a lawsuit by an injured employee:

1. Contributory Negligence

Normally, if an employee’s own carelessness contributed to their injury, you could argue they share the blame. As a non-subscriber, you can’t.

Example: Your helper ignores safety instructions and climbs a ladder without securing it. He falls. In a normal case, you could argue his negligence reduced your liability. As a non-subscriber, you can’t say a word about it.

2. Assumption of Risk

Normally, if an employee knew the job was dangerous and accepted that risk, you could argue they assumed the risk. As a non-subscriber, you can’t.

Example: Your helper knows plumbing involves heavy lifting and awkward positions. He takes the job anyway. He gets hurt. You can’t argue he “knew what he signed up for.”

3. Fellow Employee Negligence

Normally, if another employee caused the injury, you could argue the injured worker’s remedy is against that coworker, not you. As a non-subscriber, you can’t.

Example: Two helpers are working on the same job. One drops a pipe on the other. The injured helper sues you—not his coworker. And you can’t point the finger at the coworker.

What this means in practice: You go into court with almost no defense. The jury decides what you owe.

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Real Lawsuit Scenarios

Let’s put real numbers on common Texas non-subscriber lawsuits.

Scenario 1: Back Injury from Lifting

Facts: A 35-year-old plumber’s helper lifts a water heater, feels a pop in his back. Herniated disc. Surgery required. Can’t work for six months. Ongoing pain.

Lawsuit value: $150,000 to $400,000

Breakdown:

• Medical: $80,000
• Lost wages (6 months): $20,000
• Future medical: $30,000
• Pain and suffering: $50,000 to $250,000
• Attorney fees: 30-40% of settlement

Scenario 2: Fall from Ladder

Facts: Helper falls 8 feet from a ladder while running pipe. Broken wrist. Two surgeries. Permanent reduced grip strength. Can’t do plumbing work anymore.

Lawsuit value: $250,000 to $600,000

Breakdown:

• Medical: $120,000
• Lost wages + future earning capacity: $100,000+
• Pain and suffering: $100,000 to $350,000
• Permanent impairment: factored into damages

Scenario 3: Eye Injury from Pipe Cutter

Facts: Helper using a pipe cutter without safety glasses (because you didn’t enforce it). Metal fragment hits eye. Partial vision loss.

Lawsuit value: $100,000 to $300,000

Breakdown:

• Medical: $40,000
• Lost wages: $15,000
• Pain and suffering: $50,000 to $200,000
• Permanent disfigurement: additional damages

Scenario 4: Death on the Job

Facts: Helper electrocuted while working near live wiring. Dies. Survived by wife and two children.

Lawsuit value: $500,000 to $2,000,000+

Breakdown:

• Funeral expenses
• Loss of financial support
• Loss of companionship
• Pain and suffering before death (if applicable)
• Punitive damages (if gross negligence shown)

Important: Without workers’ comp, the family sues you personally. With workers’ comp, the death benefit is capped and paid by the insurance company.

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What You Cannot Do as a Non-Subscriber

Texas law is strict about what non-subscribers cannot do:

You cannot ask employees to sign pre-injury waivers. A non-subscriber may not ask employees to relinquish their right to sue before an injury occurs.

You cannot hide your non-subscriber status. You must notify employees in writing that you don’t carry workers’ comp. If you don’t, you can be sued for additional damages.

You cannot claim you’re covered when you’re not. Misrepresentation creates additional legal exposure.

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When Non-Subscriber Status Is Actually Illegal

Texas gives you the choice to opt out—but not always. Several situations require workers’ comp by law:

• Government contracts over $25,000: You must provide coverage for employees working on the project
• Public employers: Cities, counties, state agencies, and state universities must carry coverage
• Building and construction contractors for public employers: Must certify coverage in writing
• Motorbus companies: Required by law
• Motor carriers: Required for transportation over public highways
• Liquid propane gas and compressed natural gas dealers: Required
• Employers of inmates in work furlough programs: Required

If you work in any of these categories, the “optional” nature of Texas workers’ comp doesn’t apply to you. You’re breaking the law by going without coverage.

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The Cost Comparison: Premium vs. Lawsuit

Let’s put the numbers side by side.

Workers’ Comp Premium for a Small Plumbing Business:

• One helper earning $40,000/year
• Rate: $1.15 to $2.60 per $100 payroll
• Annual premium: $460 to $1,040
• Monthly: $38 to $87

One Lawsuit:

• Back injury from lifting: $150,000 to $400,000
• Fall from ladder: $250,000 to $600,000
• Eye injury: $100,000 to $300,000
• Death on the job: $500,000 to $2,000,000+

The premium is a business expense. The lawsuit is a business-ending event.

Even a modest settlement—say $75,000—is more than 70 years of workers’ comp premiums for one helper. And that’s before attorney fees, court costs, and lost business time.

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How to Get Coverage If You’ve Been Going Without

If you’ve been operating as a non-subscriber and want to get covered, here’s what to do:

Step 1: Contact a licensed Texas workers’ comp carrier.
Private carriers compete for business in Texas. Call a few and compare quotes.

Step 2: If denied, use the assigned risk pool.
Texas Mutual administers the state’s assigned risk pool for employers who can’t get coverage in the voluntary market.

Step 3: Provide accurate payroll and classification info.
The premium is based on your payroll and job classifications. Be accurate—misrepresentation can void coverage.

Step 4: Consider your deductible.
Higher deductible = lower premium. Make sure you can afford the deductible if something happens.

Step 5: Notify employees.
Once covered, you’re a subscriber. Employees get workers’ comp benefits. You get legal protection.

Step 6: Update your contracts.
If you’re a subcontractor, you may need to provide certificates of insurance to general contractors.

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What Happens If You Get Sued as a Non-Subscriber

The legal process looks like this:

1. Employee gets injured on the job
2. Employee hires a personal injury lawyer (many work on contingency—no upfront cost to the employee)
3. Lawsuit is filed in Texas civil court
4. You are served with legal papers
5. You hire your own lawyer (at your own cost)
6. Discovery phase—both sides exchange evidence
7. Settlement negotiations or trial
8. Jury verdict if no settlement

What you pay:

• Your own attorney fees: $20,000 to $100,000+
• Settlement or verdict: unlimited
• Court costs: $5,000 to $50,000
• Lost business time: weeks or months

What your employee pays:

• Attorney fees: contingency (30-40% of recovery)
• No upfront cost

The system is designed for the injured worker. As a non-subscriber, you’re the one exposed.

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The Two Ways to Protect Yourself

Option 1: Buy Workers’ Comp Insurance

You become a subscriber. Your employee’s injury goes through the workers’ comp system. You get exclusive remedy protection—meaning the employee cannot sue you for the injury.

Cost: $460 to $1,040 per year for one helper.

Option 2: Self-Insure

Large employers can self-insure if certified by the Texas Department of Insurance. This requires meeting financial requirements and posting security. Not practical for most small businesses.

For most Texas small business owners, Option 1 is the only realistic choice.

FAQ

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The Bottom Line

Texas gives you the choice to go without workers’ comp. It doesn’t protect you from the consequences of that choice.

As a non-subscriber, you lose every legal defense if an employee gets hurt. Your employee can sue you for medical bills, lost wages, pain and suffering, and more—with no cap on damages.

One lawsuit can exceed your annual revenue. One lawsuit can end your business.

For most Texas small business owners, the math is simple. Pay $460 to $1,040 per year for one helper. Keep your legal defenses. Stay in business.

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Related Articles:

• Does a Texas Plumber with 1 Helper Need Workers Comp?
• Texas Workers Comp Cost for Small Business (2026 Rates)
• Texas Workers Comp Exemptions: Who Can Legally Opt Out?

Sources:

• Texas Labor Code Section 406.033: https://statutes.capitol.texas.gov/Docs/LA/htm/LA.406.htm
• Texas Department of Insurance: https://www.tdi.texas.gov
• Texas Workforce Commission: https://www.twc.texas.gov
• OSHA: https://www.osha.gov