Key points
- Most private employers in Texas can choose not to carry workers’ comp, but they file DWC Form-005 with the state every year and lose key defenses if an employee sues.
- Texas still requires coverage from contractors on public building and construction projects, and many private contracts require it too.
- Georgia requires workers’ compensation once a business regularly employs three or more people, and part-timers and corporate officers count toward that number.
- An employee can sometimes claim benefits in both states, so a business with people in Texas and Georgia needs both states named on its policy.
- Premium is a rate per $100 of payroll for each job classification, adjusted by your experience modification rate.
Texas lets most private employers decide for themselves whether to carry workers’ compensation insurance. Georgia doesn’t: once you regularly employ three or more people there, coverage is mandatory. That one difference shapes everything else, from the paperwork you file to what happens in court when someone gets hurt.
Tree Insurance Agency has corporate offices on both sides of this line, in Katy, Texas and Fayetteville, Georgia, and we write workers’ compensation for employers in both states. Here’s how the two systems compare, and what changes when your payroll crosses the state line.
Texas workers’ compensation is elective for most private employers
Texas stands apart here: most private employers can opt out of workers’ comp entirely. An employer without a policy is called a nonsubscriber. Plenty of Texas businesses take that route, especially small offices and retail shops. It isn’t a free pass, though. Going without coverage comes with filings, notices and a much weaker position if an injured worker sues.
What a Texas nonsubscriber has to do
The Texas Division of Workers’ Compensation (DWC) at the Texas Department of Insurance sets the nonsubscriber duties:
- File DWC Form-005, the Employer Notice of No Coverage or Termination of Coverage, between February 1 and April 30 every year. You also file it within 30 days of hiring your first employee and within 10 days after a workers’ comp policy ends.
- Post a notice of no coverage where employees will see it, in English, Spanish and any other language your workforce needs.
- Give every new hire written notice that you don’t carry workers’ comp.
- If you have five or more employees, report work-related injuries, illnesses and deaths that involve more than one day of lost time on DWC Form-007.
None of that is hard. Missing it is how employers end up with administrative penalties on top of an uninsured claim.
The defenses a nonsubscriber gives up
The real cost of opting out shows up after an injury. With a policy in place, the employee’s remedy is workers’ comp benefits, and the employee generally can’t sue you for the injury. Without one, the employee can file a negligence lawsuit, and Texas Labor Code 406.033 takes away three of the defenses an employer would normally raise:
- The employee was partly at fault (contributory negligence).
- The employee knew and accepted the risk of the job (assumption of risk).
- A co-worker caused the injury (fellow-employee negligence).
The employee still has to prove the business was negligent. You can still argue that the worker was intoxicated or meant to cause the injury. A fall from a ladder that was mostly the worker’s own doing can still go to a jury, and you can’t ask the jury to cut the award for the worker’s share of the blame. One serious case can cost more than years of premium. Any agreement an employee signs before an injury waiving the right to sue is void under the same statute.
When Texas requires coverage anyway
Elective doesn’t mean optional for everyone. Under Texas Labor Code 406.096, a state agency, county, city or other political subdivision that signs a building or construction contract must require the contractor to certify in writing that it covers every employee on the public project. Each subcontractor has to give the general contractor the same certificate. “Building or construction” is broad: erecting, remodeling, repairing or demolishing a structure, roads and utilities included.
Private contracts are the other trigger. General contractors, property managers, hospitals and large commercial clients routinely write a workers’ comp requirement into their vendor agreements, often with a waiver of subrogation. If you’re a nonsubscriber and a contract asks for a comp certificate, you’ll need a policy before you can start the job.
Georgia workers’ comp requirements start at three employees
Georgia law applies to any business that regularly has three or more employees in service. The State Board of Workers’ Compensation (SBWC) is clear about who counts:
- Part-time employees count if they work for you regularly.
- Corporate officers and LLC members count toward the three.
- Up to five officers or members can waive coverage on themselves by signing Form WC-10 and filing it with the insurance carrier. The waiver takes them off the policy. It doesn’t take them out of the head count.
So a Georgia business with two full-time employees and one regular part-timer is required to carry coverage. So is a three-officer corporation with no other staff, even if all three officers sign WC-10s.
Penalties for operating without coverage in Georgia
The SBWC can assess a civil penalty of $500 to $5,000 per occurrence against an employer that fails to provide required coverage. An employer that refuses or willfully neglects to buy coverage is guilty of a misdemeanor, punishable by a fine of $1,000 to $10,000, up to 12 months in jail, or both. The employer is also on the hook for the injured worker’s benefits.
What Georgia employers must post
Covered Georgia employers post, in a conspicuous place at the workplace:
- A notice showing you comply with the law.
- The name of your insurance company.
- The SBWC Bill of Rights for the injured worker.
- A panel of physicians (Form WC-P1 or WC-P3), the list of doctors an injured employee chooses from.
Get the panel right. If it isn’t posted properly, Georgia law lets the injured employee pick any doctor at your expense, and that changes the cost and direction of the claim.
Workers compensation in Texas vs. Georgia, side by side
| Texas | Georgia | |
|---|---|---|
| Who must carry coverage | Most private employers may opt out | Businesses with 3+ regular employees |
| Part-time employees | No threshold applies | Count toward the three |
| Owners and officers | Coverage is elective | Count toward the three; up to five may waive with Form WC-10 |
| Public construction work | Coverage required for every employee on the project (Labor Code 406.096) | Covered by the general requirement |
| Annual state filing without coverage | DWC Form-005, Feb 1 to Apr 30 | Not an option at 3+ employees |
| Workplace posting | Notice of coverage or of no coverage | Compliance notice, Bill of Rights, panel of physicians |
| Employee lawsuits | Possible against nonsubscribers, without three common-law defenses | Workers’ comp is generally the exclusive remedy |
| Penalty for going without | Lawsuit exposure plus administrative penalties for missed filings | $500 to $5,000 per occurrence, plus possible misdemeanor charges |
What changes when you have employees in both states
This is where the two systems collide. A Katy contractor sends a crew to a job outside Atlanta. A Georgia security company picks up a contract in Houston. A trucking or NEMT operation hires drivers who live in one state and work in the other. Three questions come up every time.
Does a Texas policy follow employees into Georgia?
Partly, and only if the policy is set up for it. A standard workers’ comp policy has three parts that matter here:
- Part One pays benefits under the comp laws of the states listed in Item 3.A of the Information Page.
- Part Two, employer’s liability, pays your defense and damages if an injury claim becomes a lawsuit.
- Part Three, Other States Insurance, applies only to states listed in Item 3.C. If you begin work in one of those states after the policy starts, the policy treats it as though it were listed in 3.A.
The catch is in the fine print of Part Three. If you already have work in a state on the policy’s effective date and that state isn’t in 3.A, coverage for it doesn’t apply unless the carrier is told within 30 days. Other States coverage is built for new, temporary work. It isn’t a substitute for naming a state where you have regular employees. If you have an ongoing Georgia location or Georgia hires, Georgia belongs in Item 3.A.
Which state’s law applies to an injury?
Sometimes both. Each state decides for itself when its law reaches an out-of-state injury.
- Texas (Labor Code 406.071): an employee hurt while working in another state keeps Texas benefits if the employment is principally located in Texas, or if the employee was hired or recruited in Texas and was either injured within a year of hire or worked at least 10 days in Texas in the 12 months before the injury.
- Georgia (O.C.G.A. 34-9-242): an employee hurt outside Georgia is covered by Georgia law if the employment contract was made in Georgia and either the employer’s place of business or the employee’s residence is in Georgia, unless the contract was expressly for work only outside Georgia.
A driver hired at your Fayetteville yard who gets hurt on a run through Texas could have a claim under Georgia law, Texas law, or both. Georgia’s statute keeps total compensation for the same injury from exceeding what Georgia law provides. Texas also lets an employee who regularly travels between states agree in writing with the employer on the principal location of the job (Labor Code 406.073), which is worth doing for drivers and traveling supervisors.
What Texas nonsubscribers should watch in Georgia
A Texas business that has been a nonsubscriber for years can hire its third regular Georgia employee and be out of compliance that day. Georgia’s requirement is about the business you run in Georgia, and Texas’s opt-out doesn’t carry across the state line. Before you open a Georgia location or hire there, talk to us about how the policy should be written so each state’s employees land on the right coverage.
How workers’ comp premium is calculated in both states
The formula is the same in Texas and Georgia, even though the rates differ.
1. Every employee’s job is assigned a classification code. Clerical office work is one code, roofing another, security guards and truck drivers each their own. 2. Each code carries a rate per $100 of payroll, and the rate reflects how often that kind of work produces injuries and how expensive they are. 3. The carrier multiplies each class’s estimated annual payroll by its rate. 4. If your business is large enough to qualify, an experience modification rate (mod) adjusts the total. A mod of 1.00 is average. A 0.85 mod cuts premium by 15 percent, and a 1.25 mod raises it by 25 percent.
The premium you pay at the start of the term is an estimate. After the policy ends, the carrier audits your actual payroll and job classes and bills or refunds the difference. Uninsured subcontractors are the most common source of a surprise audit bill, because the carrier can add their pay to your payroll. Collect certificates of insurance from every subcontractor before they start.
We don’t quote rates in articles because they move with your classes, payroll, mod and carrier. Send us payroll by job type and by state through our quote form, and we’ll shop it across our carrier partners. Our Katy office handles Texas accounts and our Fayetteville office handles Georgia, and a business with people in both states works with one agency for both.
Common questions
Yes. An employee of a Texas nonsubscriber can sue for negligence, and the employer can’t argue that the worker was partly at fault, accepted the risk of the job or was hurt by a co-worker. The employer can still argue it wasn’t negligent, or that the worker was intoxicated or caused the injury on purpose. Covered employers are generally protected from these suits.
If your business regularly employs three or more people in Georgia, Georgia law requires coverage, and Texas’s opt-out doesn’t change that. A Georgia employee hired in Georgia can also claim Georgia benefits for an injury in another state. Tell us where each employee is hired and works, and we’ll make sure Georgia is listed on the policy where it needs to be.
Other states coverage is Part Three of the standard policy. It covers you if you start work after the policy begins in a state listed in Item 3.C of the Information Page. It isn’t meant for states where you already have employees on the effective date. Those need to be listed in Item 3.A, or the carrier must be told within 30 days.
Yes. Corporate officers and LLC members count, even if they waive coverage on themselves. Up to five officers or members can opt out by signing Form WC-10 and filing it with the carrier, but the business still counts them when deciding whether it must carry workers’ compensation.
It depends on the job classes, payroll and your claim history more than the state. Both states price coverage as a rate per $100 of payroll for each job classification, adjusted by your experience modification rate. The rates for a given class differ between the states, so the only way to compare is to quote your actual payroll in each.
Related coverage
Sources
- Texas Department of Insurance: Workers’ compensation for employers
- Texas Department of Insurance: Non-subscriber requirements
- Texas Department of Insurance: DWC Form-005, Employer Notice of No Coverage
- Texas Labor Code Chapter 406
- Texas Department of Insurance: Texas workers’ compensation rate guide
- Georgia State Board of Workers’ Compensation: Insurance FAQs
- Georgia State Board of Workers’ Compensation: Employer information
- O.C.G.A. 34-9-242: Compensation for injury outside of state