The Texas Workers’ Compensation system was designed to be the total remedy for injuries on the job. Government entities federal, state, county, or city must carry workers’ compensation. Some private sector employers must carry a policy as a condition of doing business by contract. An example of this would be companies that bid on contracts offered by the federal, state, county, or city governments. All of the contractors bidding for the same work are on level ground, so the cost of doing business is close enough for competition.
Nearly half of all of the employers in Texas are non-subscribers, not to mention those employers that have not properly filed to reject workers compensation, yet do not have it.
On the other hand, Texas does not require private sector employers to carry Workers’ Compensation. There are forms available from the DWC (Division of Workers Compensation) in which an employer may use to reject this coverage and become a non-subscriber.
Many responsible employers have purchased insurance designed for non-subscribers to fund payments of benefits to employees injured on the job. However, insurance is only one part of a successful non-subscribers program.
The 4 basic components are:
1. Group occupational accident insurance coverage including medical, disability income, and AD&D coverages for W-2 employees and/or 1099 contract workers. (waivers are no longer enforceable)
2. Compliance with state administrative requirements: Proper compliance with the DWC by annually filing the form 5, following the instructions on posting required notices and accident reporting proceedures will enable you to properly reject workers comp.
3. A current up to date ERISA plan document: An ERISA plan document is mandated by the federal government for non-subscribers. It lets the injured employee know what to expect in the event of an injury on the job. This federal plan document must be customized for your business by an experienced attorney, and is usually provided by an insurance carrier.
4. A written OSHA compliant safety plan: The employer is required to provide a safe workplace under common law. Using a formal written safety program the employer can document their attempt to provide a safe workplace. When an employee has signed off on certain risks that they may have on the job it documents their awareness of the risk as well as any proper proceedures that need to be followed to avoid accidents and/or injuries.
Non-Subscriber Checklist
Have you complied with the Texas Workers Comp Act by filing your form DWC-5?
Is your OSHA Log 300 up-to-date?
Have all of your contractors and/or employees signed the statutory Notice of No Workers Compensation Coverage and have you filed it in their personnel records?
Can you document that you provide a safe workplace?
Have you posted all of the Federal and State required notices?
Have you selected a sound Non-Subscriber group accident plan?
Can you document that all of your employees have been trained in the safe conduct of their work and the correct operation of equipment.
Do you have someone representing your needs as a Non-Subscriber?
Do you have an employee policy and procedures manual as well as an OSHA compliant written loss prevention program or safety manual?
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