Workers comp coverage required in Texas
Workers' compensation coverage is generally optional for private employers in Texas. Verified 2026-05-09.
Who must carry workers comp in Texas?
Texas workers compensation coverage is required Workers' compensation coverage is generally optional for private employers in Texas.
The threshold language matters: states write the rule slightly differently. Some count any worker, some count only W-2 employees, some count owners separately, some have industry-specific exemptions (agriculture, domestic service, casual labor). For a Texas employer with a non-trivial workforce, the safest default is: assume coverage is required and confirm with the state department of insurance or a local agent.
How the threshold interacts with 1099s and subs
Texas uses the common law test to determine if a 1099 contractor is an employee; if found to be an employee, they must be covered by a subscribing employer. If a general contractor is a subscriber, they can be held liable for injuries to employees of an uninsured subcontractor if the subcontractor is performing work that is part of the general contractor's usual trade or business.
Penalty for going without
Must report to the state that they do not have coverage. Must also report to DWC any work-related injuries resulting in more than one day of lost time, as well as all work-related illnesses, and deaths. The financial penalty is usually a fraction of the human cost: an injured employee at an uncovered employer can sue directly under tort law instead of being limited to the workers comp benefit, exposing the owner to lost-wage damages, pain and suffering, and punitive damages without the corporate veil.
Related reading
FAQs
Who has to carry workers comp in Texas?
Workers' compensation coverage is generally optional for private employers in Texas.
When does the requirement kick in for a new Texas employer?
The clock starts on the first day the first qualifying employee is on the books. Texas does not have a grace period for new employers, so a policy needs to be bound on or before the first hire date. Some agents can issue same-day binders for low-risk class codes.
What is the penalty for not having workers comp in Texas?
Must report to the state that they do not have coverage. Must also report to DWC any work-related injuries resulting in more than one day of lost time, as well as all work-related illnesses, and deaths.
Do 1099 contractors trigger the coverage requirement in Texas?
Texas uses the common law test to determine if a 1099 contractor is an employee; if found to be an employee, they must be covered by a subscribing employer.
Are subcontractors counted toward the threshold in Texas?
If a general contractor is a subscriber, they can be held liable for injuries to employees of an uninsured subcontractor if the subcontractor is performing work that is part of the general contractor's usual trade or business.
What happens if I am audited and found non-compliant in Texas?
Texas typically issues a stop-work order, assesses back premium for the period of non-coverage, and adds penalties on top. Specifically: Must report to the state that they do not have coverage. Must also report to DWC any work-related injuries resulting in more than one day of lost time, as well as all work-related illnesses, and deaths. Severe or repeat violations can lead to criminal charges and personal liability for the business owner, separate from the corporate veil.