Texas Workers Compensation Guide

Workers Compensation Requirements in Texas

Texas is the only state in the nation where workers' compensation is not mandatory for most private employers. Employers can choose to be 'subscribers' (carry workers' comp) or 'non-subscribers' (not carry coverage). Non-subscribers lose most liability defenses and face direct lawsuits from injured workers. Texas Mutual Insurance Company serves as the competitive state fund.

Workers Comp Rates in Texas

Workers compensation premiums in Texas are calculated based on payroll, job classification (NCCI or state classification codes), and the employer's experience modification factor. The average rate of approximately $1.55 per $100 of payroll is a statewide blended average — actual rates vary significantly by job classification. A clerical office worker might pay $0.20-$0.40 per $100, while a roofing contractor might pay $15-$25 per $100.

For example, an employer with $1 million in payroll at the average rate of $1.55 per $100 would pay approximately $15,500 annually before experience modification adjustments. Employers with better-than-average loss experience (experience mod below 1.0) pay less; those with worse experience pay more.

Average Workers Comp Rates by City in Texas

Workers comp rates vary by location within Texas due to differences in local injury rates, medical costs, and insurer competition. The following estimated average rates per $100 of payroll reflect blended rates across all job classifications.

City	Est. Avg. Rate per $100 Payroll
Houston	$1.68
San Antonio	$1.55
Dallas	$1.62
Austin	$1.52
Fort Worth	$1.58
El Paso	$1.45
Arlington	$1.60
Corpus Christi	$1.50

Rates shown are blended averages across job classifications. Actual rates vary significantly by occupation type. Consult a licensed workers' compensation specialist for employer-specific quotes.

What Makes Texas Unique

Texas's voluntary workers' comp system is unique in the nation. Non-subscriber employers who opt out of workers' comp face significant liability risk — they cannot use the fellow servant rule, contributory negligence, or assumption of risk as defenses against injured worker lawsuits. Texas non-subscription creates a complex risk management decision for employers. Some large Texas employers have opted out and created their own non-subscriber benefit plans.

Workers Comp Benefits in Texas

Texas workers' comp provides temporary income benefits at 70% of average weekly wage. Medical benefits cover necessary treatment. Impairment income benefits use a percentage of average weekly wage based on impairment rating.

Employee Rights in Texas

Texas workers' comp subscribers receive benefits through the Division of Workers' Compensation. Non-subscriber employees can sue their employers directly. Dispute resolution for subscribers is through the Division with access to district courts.

How Workers Comp Premiums Are Calculated in Texas

Workers compensation premiums in Texas follow this basic formula: (Payroll / 100) × Classification Rate × Experience Modification Factor = Premium. The experience modification factor (EMR or X-Mod) compares your actual loss experience to the expected loss experience for your industry. An EMR of 1.0 is average; below 1.0 means better-than-average safety record (lower premiums); above 1.0 means worse-than-average (higher premiums).

Job classification codes are assigned based on the type of work employees perform. Accurate classification is critical — misclassifying employees into lower-risk categories can result in premium audits and significant back-premium assessments. An employer with employees in multiple classifications must track payroll by class code throughout the year.

How to Reduce Workers Comp Costs in Texas

Texas employers should carefully evaluate the subscriber vs non-subscriber decision with an attorney and risk manager. Non-subscription eliminates liability defenses — the potential exposure from a serious injury lawsuit can far exceed workers' comp premiums. Most small and medium employers benefit from subscribing. Texas Mutual provides competitive pricing, particularly for small businesses.

• Implement a formal workplace safety program — documented safety training reduces injury frequency and improves experience modification over time.
• Develop a return-to-work program — getting injured workers back on modified duty reduces temporary disability claim duration and cost.
• Report all injuries promptly — early reporting enables timely medical treatment and claims management, reducing claim severity.
• Review job classifications annually — ensure employees are classified in the correct (not simply the lowest-cost) classification code.
• Work with a loss control specialist — many insurers offer free safety consultation services that identify hazard reduction opportunities.

The information on this page is provided for general informational purposes only and reflects estimated industry averages and state requirements as of 2026. Workers compensation laws, rates, and requirements change frequently and vary significantly by employer size, industry, and job classification. Rate estimates shown are blended averages and do not represent actual quotes for any specific employer. Always consult a licensed workers' compensation insurance professional and your state's workers' compensation regulatory agency for current, employer-specific information.