Texas workers compensation requirements decide exactly when you must carry coverage, who counts toward the threshold, and what it costs to skip it. This guide breaks down the Texas workers compensation requirements in plain English — the employee count that triggers the mandate, who is exempt, the penalty for going without, and how to get covered. All figures are from Texas sources, verified as of June 2026.
In This Texas Guide:
Is Workers’ Comp Required in Texas?
Texas is the only state where most private employers may legally opt out of workers’ compensation entirely; coverage is voluntary for private employers unless they contract with a government entity, in which case coverage is required for employees working on that public project (Texas Labor Code 406.096)
Texas Workers’ Comp Requirements at a Glance
Here are the exact Texas workers compensation requirements every employer should know:
| Employees that trigger the mandate | 0 |
| Which workers count | There is no employee-count threshold that triggers a mandate for most private employers because coverage is voluntary; however, employers who contract with a government entity must carry coverage for every employee on that project starting from the first employee; non-subscribing employers with 5 or more non-exempt employees must report work-related injuries to the Division of Workers’ Compensation on DWC Form-007 |
| Who is exempt | Domestic workers employed in a personal residence, casual workers engaged in employment incidental to a personal residence, farm and ranch employees (unless the employer voluntarily elects coverage), and persons covered by a federal workers’ compensation law such as the Longshore and Harbor Workers’ Compensation Act or the Federal Employees’ Compensation Act (Texas Labor Code 406.091) |
| Owners & officers | Sole proprietors, partners, and corporate officers may be excluded from a workers’ compensation policy using the Partners Officers and Others Exclusion Endorsement (WC 42 03 08); conversely they may elect coverage using the Sole Proprietors Partners Officers and Others Coverage Endorsement (WC 42 03 10); a farm or ranch policy may also name an owner, partner, corporate officer, or family member for coverage under Subchapter H of Chapter 406 |
| Penalty for going without | Because coverage is voluntary for most private employers, there is no fine for simply choosing not to carry workers’ compensation; however, a non-subscribing employer who fails to file the required annual notice (DWC Form-005) with the Division of Workers’ Compensation or fails to post required workplace notices commits an administrative violation subject to a penalty of up to 25000 per day per occurrence under Texas Labor Code Chapter 415; more significantly, a non-subscriber loses common-law defenses in employee injury lawsuits and cannot argue contributory negligence, assumption of the risk, or fellow-employee negligence, exposing the employer to potentially unlimited damages |
| Monopolistic state? | No — buy from private carriers |
| State fund | Texas Mutual Insurance Company is the state-chartered insurer of last resort, originally created by the legislature in 1991 as the Texas Workers’ Compensation Insurance Fund; it operates as a competitive state fund, not a monopolistic one |
How to Get Workers’ Comp Coverage in Texas
Purchase a policy from any licensed private insurance carrier; if unable to find coverage in the voluntary market, purchase from Texas Mutual Insurance Company (the state-chartered insurer of last resort) at texasmutual.com or 800-859-5995; large employers may also apply to the Division of Workers’ Compensation for a certificate of authority to self-insure
Private market: YES
What Workers’ Comp Covers in Texas
Workers’ compensation is a no-fault system: an injured employee gets benefits without having to prove the employer did anything wrong, and in exchange gives up the right to sue for most workplace injuries. A typical Texas policy pays for medical treatment tied to a work injury, part of the wages lost while the worker recovers, longer-term disability benefits if the injury is permanent, and death benefits to a family.
It also includes employers-liability coverage, which protects the business if an injury still leads to a lawsuit. That trade-off is the practical heart of the Texas workers compensation requirements: the coverage exists to keep one bad injury from sinking both the worker and the business.
Employees vs. Independent Contractors in Texas
The most common way owners get the Texas workers compensation requirements wrong is by assuming a worker is an “independent contractor” who does not count. State agencies look at how the work is actually controlled, not the label on a 1099. If Texas decides a contractor was really an employee, the business can owe back premiums and penalties as if coverage should have been in place all along.
When you are close to the employee threshold, confirm each worker’s status with your state board before you decide you are exempt.
Other Texas workers’-comp rules: Non-subscribing employers must file DWC Form-005 within 30 days of hiring their first non-exempt employee or within 10 days of terminating existing coverage and must refile annually; non-subscribers with 5 or more non-exempt employees must report every work-related injury or occupational disease on DWC Form-007;
employees of a subscribing employer are automatically covered unless they file a written waiver electing to retain common-law rights under Texas Labor Code 406.034; confirm all requirements with the DWC and a licensed insurance agent in your state
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Understanding Texas Workers Compensation Requirements
The Texas workers compensation requirements exist to make sure injured employees get medical care and lost wages without having to sue. For most owners, the Texas workers compensation requirements come down to one number: the employee count that triggers the mandate, shown in the table above.
Once you hit that count, Texas workers compensation requirements apply whether you planned for them or not, and the penalty for going without is real. If any part of the Texas workers compensation requirements is unclear for your business, your state workers’-comp board can confirm the threshold, the exemptions, and how to get covered.
Next step: Once you know what your business in Texas actually needs, comparing quotes from several carriers takes only a few minutes. Many owners do this right after they understand their state and trade requirements.
Frequently Asked Questions
Is workers’ comp required in Texas?
Texas is the only state where most private employers may legally opt out of workers’ compensation entirely; coverage is voluntary for private employers unless they contract with a government entity, in which case coverage is required for employees working on that public project (Texas Labor Code 406.096)
What is the penalty for not having workers’ comp in Texas?
Because coverage is voluntary for most private employers, there is no fine for simply choosing not to carry workers’ compensation; however, a non-subscribing employer who fails to file the required annual notice (DWC Form-005) with the Division of Workers’ Compensation or fails to post required workplace notices commits an administrative violation subject to a penalty of up to 25000 per day per occurrence under Texas Labor Code Chapter 415;
more significantly, a non-subscriber loses common-law defenses in employee injury lawsuits and cannot argue contributory negligence, assumption of the risk, or fellow-employee negligence, exposing the employer to potentially unlimited damages
Who is exempt from Texas workers’ comp?
Domestic workers employed in a personal residence, casual workers engaged in employment incidental to a personal residence, farm and ranch employees (unless the employer voluntarily elects coverage), and persons covered by a federal workers’ compensation law such as the Longshore and Harbor Workers’ Compensation Act or the Federal Employees’ Compensation Act (Texas Labor Code 406.091)
Official Texas Sources & Resources
- Texas Texas Department of Insurance, Division of Workers’ Compensation (DWC): https://www.tdi.texas.gov/wc/index.html
- Texas Workers’ Comp Statute: https://statutes.capitol.texas.gov/Docs/LA/htm/LA.406.htm
- U.S. Department of Labor — Workers’ Comp: dol.gov
- U.S. Small Business Administration: sba.gov
These Texas workers compensation requirements were last verified against official sources in June 2026. Rules and penalties change — confirm the current figure with your state workers’-comp board or a licensed agent.
More Texas Business Insurance Guides
Disclaimer: This guide is informational only and is not insurance, legal, or tax advice. Business Insure Guide is an independent educational resource, not an insurance agency or carrier. Coverage needs, legal requirements, and prices vary by business, profession, and state and change over time. Always verify the exact requirement and price with a licensed insurance agent and your state before you buy.