What is a Texas nonsubscriber, and what does it give up?

Texas is unusual. Section 406.002 of the Labor Code says that, except for public employers and as otherwise provided by law, "an employer may elect to obtain workers' compensation insurance coverage." Coverage can come from a licensed insurance company or through self-insurance (Section 406.003).

The difference shows up after an injury. For an employer with coverage, Section 408.001(a) makes comp benefits the employee's exclusive remedy against the employer, with an exception for exemplary damages in deaths caused by intentional acts or gross negligence. A nonsubscriber has no comp policy, so an injured employee's path is a negligence lawsuit.

TDI's 2024 biennial report to the legislature found 24 percent of Texas employers were nonsubscribers, the lowest since 2016, and 13 percent of Texas employees worked for one.

Section 406.033(a) says that in a suit by an employee who is not covered by workers comp, "it is not a defense" that:

1. the employee was guilty of contributory negligence;
2. the employee assumed the risk of injury or death; or
3. the injury or death was caused by the negligence of a fellow employee.

The employer can still defend on the ground that the employee intended the injury or was intoxicated (Section 406.033(c)), and the employee must still "prove negligence of the employer or of an agent or servant of the employer" (Section 406.033(d)).

The Texas Supreme Court applied this in Kroger Co. v. Keng (2000), holding that "a nonsubscribing employer is not entitled to a jury question on its employee's alleged comparative responsibility." In plain terms, a jury does not get to reduce the award because the injured hand was careless.

The statute also limits waivers. Under Section 406.033(e), an employee cannot waive these claims before an injury, and any such agreement "is void and unenforceable." A waiver after an injury is valid only if it meets the conditions in Section 406.033(f) and (g), including timing, a prior medical evaluation, and conspicuous wording. That is a legal matter for your attorney.

Being a nonsubscriber is not just the absence of a policy. TDI's Division of Workers' Compensation (DWC) requires filings and notices.

Oilfield MSAs are built on each side taking care of its own people. Under knock-for-knock, you typically indemnify the operator group for injuries to your employees, and the MSA commonly requires workers comp with employers liability and a Texas waiver of subrogation.

A nonsubscriber cannot hand over those pieces. There is no comp policy to show on a certificate, no employers liability under Part Two, and no WC 42 03 04 to attach. Prequalification platforms check for them. See ISNetworld insurance requirements and why certificates get rejected.

And an injured employee of a nonsubscriber still has a negligence claim, possibly against your company and possibly against the operator, which brings your MSA indemnity into play. Read what happens if an employee is hurt on an operator's lease and whether oilfield contractors need workers comp in Texas.

• Pull every MSA you have signed and check whether it requires workers comp. Many do, and working without it can be a breach.
• Confirm your DWC Form-005 filings and Notice 5 postings are current.
• Ask your attorney to review any employee injury benefit plan or post-injury waiver process against Section 406.033.
• If you decide to buy coverage, Section 406.005(d) requires you to notify employees within 15 days after it takes effect. Get the policy's waiver, employers liability limits, and certificate set up to match your MSAs before the first job.