Limitations Of Alternatives To Workers Compensation For Employees


The vast majority of states in the US have made it mandatory for employers to get workers compensation insurance. It is seen as the best solution to workplace illness and injuries. With this in place, employees who need funds for their medical care and everyday expenses can obtain the money readily. It also protect the employers from lawsuits due to negligence. Furthermore, businesses can be shielded from the financial shock of major accidents affecting multiple workers. However, the insurance payments can be quite hefty. Texas employers have the ability to opt out of the workers compensation system but this has its limitations.

Direct Business with the Texas Government

Companies with direct dealings with the Texas government at state and local levels are required to carry workers compensation. They cannot conduct business involving government agencies if they are operating as non-subscribers. This can be severely limiting to the point that some might be willing to pay the large premiums for WC insurance just to remove the barrier. After all, governments have big budgets for public works projects. They might see this as an investment that will pay dividends if they win the bids.

Large Companies that Require Workers Compensation

This requirement is not just imposed by government agencies for their projects. The same might be imposed as a policy by major corporations for their contractors. The result is similar with businesses that want to work with these big names needing to get WC insurance just to get a foot inside the door of these lucrative opportunities. A lot of businesses cater to other businesses such as ad agencies that create marketing materials for big brands. They simply cannot afford to be excluded because of this technicality.

Loss of Immunity to Lawsuits

Although it is possible to get alternatives to workers compensation for employees, this may not be the most ideal approach. Not having workers compensation insurance means a loss of immunity to lawsuits that employees might launch against the company. If there are disputes regarding compensation, then employers will have to risk the possibility of going to court which is an extremely difficult, time-consuming, and expensive endeavor. Many are likely to play it safe and simply get the insurance outright. However, there may be situations where alternatives have their merit.

Loss of Common Law Defenses

Without WC insurance, the loss of immunity from suit is only the beginning. Companies would also lose the ability to use common law defenses such as contributory negligence. This is defined as a failure of the plaintiff, in this case the employee, to exercise reasonable care to ensure their safety. Such a legal defense could bar the plaintiff from receiving compensation or at least reduce the amount in proportion to the contributory negligence. In other words, companies without workers compensation would not be able to point to their employees as partially to blame for the resulting illness or injury.

Employee Attitudes to Non-coverage

If a company were to opt out of this insurance coverage, then this will have to be made clear to prospective and current employees. It could change the whole dynamic and make people think twice about the company, unless they find a suitable alternative that would ease the anxiety of those affected.


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