Texas is the only state in the country where workers’ compensation coverage is elective, not mandatory, for most private employers. An employer who opts out (“non-subscriber”) must notify the Texas Division of Workers’ Compensation under Sec. 406.004 and notify employees under Sec. 406.005, and forfeits certain common-law defenses (contributory negligence, assumption of risk, fellow-servant rule) in the event of a workplace injury lawsuit, per Sec. 406.033.
EXCEPTION: coverage is mandatory for government building or construction contracts under Sec. 406.096 — a non-subscribing contractor cannot certify compliance and is barred from competing for public construction work on that basis alone.