Texas Brokers' Obligation to Pay Workers' Compensation

Legal Requirement in Texas

In Texas, any broker who employs staff must secure workers' compensation insurance or be designated as a "non‑subscriber" under the state's no‑fault system. The obligation applies whether the broker is an independent contractor, a brokerage firm, or a franchise owner.

Who Must Carry Coverage

Coverage is mandatory for brokers who have at least one employee, including part‑time or seasonal staff. Sole proprietors without employees are exempt, but if they hire even a temporary assistant, the requirement triggers.

Options for Compliance

Broadly, brokers can either purchase a workers' compensation policy from a private insurer or opt into the State Fund, the public insurer administered by the Texas Department of Insurance (TDI). The State Fund offers a standard rate structure, while private carriers may provide customized programs based on risk assessments.

Key Differences

• Private policies often include higher limits and additional safety services.
• The State Fund is more accessible for small firms with limited underwriting history.

Penalties for Non‑Compliance

If a broker fails to maintain required coverage, the TDI can issue a citation, levy fines up to $500 per day, and potentially suspend the brokerage's license. Additionally, uncovered workers may file a civil suit for damages, exposing the broker to liability beyond the standard workers' comp payout.

Steps to Ensure Compliance

1. Verify employee count each payroll period.2. Contact a licensed insurance carrier or the State Fund to obtain a quote.3. Maintain up‑to‑date policy documentation and post the certificate in a visible workplace area.4. Review the policy annually or after any change in staffing levels.

Comparative Overview