Texas is the only U.S. state where employers can opt out of workers comp. Use the 2026 Texas settlement calculator to estimate TIBs and IIBs under DWC rules, and learn what nonsubscriber status means for your claim.
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| Category | Texas (TX) Rule |
|---|---|
| System type | Opt-out. Texas is the only U.S. state where private employers are not required to carry workers compensation insurance. Employers that do not carry coverage are called nonsubscribers. |
| TTD benefit rate | Temporary Income Benefits (TIBs): 70% of average weekly wage, capped at 100% of the State Average Weekly Wage (SAWW). Check TDI for the current dollar cap. |
| Waiting period | 7 days. If disability exceeds 14 days, the first 7 days are paid retroactively. |
| Impairment benefits | Impairment Income Benefits (IIBs): 70% of AWW multiplied by 3 weeks for each percentage point of whole-body impairment. |
| Notice to employer | 30 days from date of injury. |
| Claim filing deadline | 1 year from date of injury (Texas Labor Code, Title 5). |
| Doctor choice | Employee selects from the insurance carrier's approved provider network. |
Texas is the only state in the United States where private employers can legally choose not to carry workers compensation insurance. An employer that opts out is called a nonsubscriber. This single rule changes everything about how workplace injuries are handled in Texas, because it creates two entirely separate legal tracks depending on whether the employer carries coverage.
If the employer is a subscriber (carries workers comp), the injured worker receives benefits through the Division of Workers' Compensation (DWC) under the Texas Department of Insurance. The worker gives up the right to sue the employer in exchange for no-fault benefits. If the employer is a nonsubscriber, the worker can file a personal injury lawsuit against the employer in civil court. The nonsubscriber employer loses three historically powerful defenses: contributory negligence, assumption of risk, and the fellow-servant rule. This means it is significantly easier for an injured worker to win a tort lawsuit against a nonsubscriber than against a typical negligence defendant.
Texas uses a terminology that differs from most states. What other states call Temporary Total Disability (TTD), Texas calls Temporary Income Benefits (TIBs). TIBs equal 70 percent of the difference between the worker's pre-injury average weekly wage and any post-injury earnings. The maximum weekly TIBs amount is capped at 100 percent of the State Average Weekly Wage (SAWW), which TDI updates annually. TIBs can last up to 104 weeks.
Impairment Income Benefits (IIBs) are unique to Texas. After the worker reaches Maximum Medical Improvement (MMI), a doctor assigns an impairment rating as a percentage of whole-body impairment. The IIBs formula is 70 percent of AWW multiplied by 3 weeks for each percentage point of impairment. A 15 percent impairment rating therefore produces 45 weeks of IIBs payments at 70 percent of AWW.
Supplemental Income Benefits (SIBs) may continue after IIBs end if the worker has a 15 percent or greater impairment rating and has not returned to work earning at least 80 percent of pre-injury wages. SIBs require quarterly applications showing good-faith job search efforts.
Approximately 20 to 30 percent of Texas employers historically did not carry workers compensation. Nonsubscribers must notify employees in writing that they do not carry coverage. If a nonsubscriber's employee is injured, the employee can file a negligence lawsuit. The critical advantage for the worker is that the employer cannot assert contributory negligence, assumption of risk, or the fellow-servant doctrine. The employer must prove it was not negligent at all, which is a much harder defense position.
Nonsubscriber claims can result in significantly higher recoveries than workers comp benefits because tort damages include pain and suffering, mental anguish, and punitive damages, none of which are available through the workers comp system. However, the worker must still prove the employer was negligent, that the negligence caused the injury, and that damages resulted. These claims are tried before juries in civil courts, not through the DWC administrative process.
Some large Texas employers that opt out create their own injury benefit plans, sometimes called "ERISA plans" or "occupational injury benefit plans." These employer-designed plans often have lower benefits and faster deadlines than the state workers comp system. Workers should review these plans carefully with an attorney before accepting benefits.
Unlike most states, Texas does not use a traditional scheduled loss table that assigns a fixed number of weeks per body part. Instead, Texas uses the whole-body impairment rating from the AMA Guides (currently the 4th Edition is referenced by DWC rules) and applies the IIBs formula: 3 weeks of benefits per percentage point of impairment. This means the body part itself does not determine the number of weeks; the impairment rating does.
For example, a worker with a 20 percent whole-body impairment rating receives 60 weeks of IIBs (20 multiplied by 3), regardless of whether the impairment is in the back, shoulder, or knee. The weekly IIBs rate is 70 percent of the pre-injury AWW, subject to the SAWW cap.
This approach differs from states like Ohio or New York, where a hand injury carries a fixed number of scheduled weeks (such as 200 or 244 weeks) and the settlement is calculated by multiplying those weeks by the impairment percentage and the weekly rate.
Texas does not use the traditional compromise-and-release (C&R) settlement structure common in most states. Instead, disputes over benefits are resolved through the DWC administrative process: benefit review conferences, contested case hearings, and appeals. The worker and the insurance carrier may agree to resolve a dispute, but the process is structured differently than a typical lump-sum settlement.
However, when the injured worker has a nonsubscriber employer, the tort lawsuit follows standard civil litigation rules, and settlements in those cases work like any personal injury settlement: the parties negotiate a lump-sum payment, the worker signs a release, and the case is closed.
Temporary Income Benefits (TIBs): 70% of pre-injury average weekly wage (AWW)
If your Texas employer is a nonsubscriber, you can file a personal injury lawsuit against the employer. The employer cannot use the defenses of contributory negligence, assumption of risk, or fellow-servant doctrine. This can make it easier to recover damages, but you must still prove the employer was negligent.
TIBs equal 70 percent of the difference between your pre-injury average weekly wage and any post-injury earnings. The maximum weekly amount is capped at 100 percent of the State Average Weekly Wage, updated annually by TDI. TIBs can last up to 104 weeks.
IIBs are paid after you reach Maximum Medical Improvement. A doctor assigns an impairment rating as a percentage of whole-body impairment. The formula is 70 percent of your AWW multiplied by 3 weeks per percentage point of impairment.
Generally no. If your employer is a workers comp subscriber, the exclusive remedy doctrine applies, and your benefits come through the DWC system. Exceptions may exist for intentional acts or certain third-party claims. Consult a licensed attorney.
You must notify your employer within 30 days of the injury. You have 1 year from the date of injury to file a claim with the Division of Workers' Compensation.
If your employer's insurance carrier has an approved provider network, you must choose from that network. You can request a change of doctor through the DWC process. In emergencies, you can seek immediate treatment from any provider.
There is a 7-day waiting period before income benefits begin. If your disability lasts more than 14 days, the first 7 days are paid retroactively.
No. SettlementCalculator.xyz is operated by Mustafa Bilgic, a non-attorney individual operator. This page provides educational information only. Consult a licensed attorney in Texas for legal advice about your specific claim.