Below are some common misconceptions surrounding the nonsubscribers in Texas. Let us dispel them for you.
Reality: The fact is, nonsubscription is dominated by retail, healthcare, food service, transportation and manufacturing employers with high occupational injury frequency and severity. There is no “adverse selection” against the WC system. In fact, the WC system would only be further strained by the return of these high-risk employers.
Reality: This ignores a myriad of current TDI-DWC, ERISA and OSHA reporting and disclosure requirements for nonsubscribers, the ERISA claims regulations, and various other nonsubscriber benefits to and protections for employees.
Reality: Nonsubscription can be credited with acting as a “safety valve” to the current Workers’ Compensation System. Texas’ dual approach to workers’ compensation makes both systems better. It also provides businesses choices which helps bring jobs to Texas.
Reality: Nonsubscribers are HIGHLY MOTIVATED to prevent employee injuries due to the negligence liability exposure imposed upon them by law. Past studies have found high satisfaction levels among injured workers employed by nonsubscribers in the areas of employer treatment, medical coverage and income benefits paid during recovery.
Reality: With well over 100,000 businesses and 7 million employees currently covered by WC, how many are enough? These numbers are significantly higher than most other state WC systems.
Nonsubscription is the process of an employer “opting out” or “nonsubscribing” from the Texas Workers’ Compensation System in order to manage its own occupational injury claims. The choice to nonsubscribe in Texas has been available since the state’s first workers’ compensation laws were adopted in 1913.
The Texas Alliance of Nonsubscribers is a nonprofit trade association of responsible employers committed exclusively to preserving the choice of Texas businesses to manage their occupational injury claims. The Alliance is committed to educating policy makers on the benefits of nonsubscription for employees and employers. The Alliance also serves as a forum among its members for sharing information on how to increase worker safety, maximize employee protections, and strengthen a company’s ability to reinvest in itself, its workers, and its community.
No. Alliance members are not “going bare.” In fact, members of the Alliance are required to have an occupational injury plan in place that protects their employees. Nonsubscribers are highly motivated to prevent employee injuries and avoid exposure to negligence liability settlements and judgments.
Most nonsubscribing companies providing occupational injury benefit plans are regulated under federal law through ERISA. The benefits offered by nonsubscribers must comply with the many employee protections of ERISA (the Employee Retirement Income Security Act). Additionally, nonsubscribers must comply with health and safety rules of OSHA (Occupational Safety and Health Act) and meet filing requirements of the Texas Department of Insurance.
In opting out of the state’s workers’ compensation system, employers lose their statutory and common law defenses against work-related negligence lawsuits by their employees. As a result, nonsubscribers who do not provide safe work environments and adequate care for injured workers stand to be held accountable through the civil justice system.
By avoiding a “one size fits all” approach to managing worker injuries, nonsubscribers are able to customize their safety and benefit plans to meet the needs of their employees. With increased focus on workers’ safety and a coordinated approach to treatment and rehabilitation programs, companies are able to produce significant savings through reduced injuries, quicker and more effective treatment, and a reduction in the premiums that pay for their occupational injury programs.
Additionally, the flexibility brought about by nonsubscription allows injured employees to begin receiving wages immediately without waiting on an insurance company to pay. In many instances, injured employees of nonsubscribing companies receive higher wage benefits for longer periods of time.
ERISA fiduciary rules prohibit an employer from withholding benefits in an attempt to force a settlement if an employee or family prefers to receive the promised benefits. Employers risk jeopardizing their nonsubscription programs, not to mention their company’s reputation and the morale and support of their employees, if they fail to deliver on established policies and practices that guide the management of occupational injury claims. Additionally, personal liability can attach to those who violate certain ERISA rules.
One study conducted by the State of Texas found that employees of nonsubscribing businesses had a higher satisfaction level with their occupational injury benefit plans than their counterparts who have workers’ compensation coverage.
By managing their own occupational injury claims, nonsubscribing employers are able to utilize alternative, market-driven plans to produce savings that allow for employee incentives, enhanced safety programs, training, profit sharing, new equipment, company expansion, job creation, and community support. The greatest benefit a nonsubscription program can produce for a business is a safe, healthy, and productive employee. Nonsubscription motivates employers to invest in and protect their greatest resource—their employees.