TX: Study Shows Decrease In Number Of Small Businesses With WC

Liz Carey

Dallas, TX (WorkersCompensation.com) – A study released in February shows that nearly a third of small businesses in Texas are opting out of subscribing to the state’s workers’ compensation insurance program.

According to the Texas Department of Insurance, 28 percent of small business owners surveyed said they opted not to subscribe to the program. The report said that was an increase of 6 percent since the last survey in 2016. In 2014, 33 percent of all small businesses reported that they were non-subscribers.

Small business owners, those with fewer than 50 employees, who chose to opt out of the coverage cited too few employees and too few on-the-job injuries as their reasons for opting out of coverage. Almost one in five, or 19 percent, said they opted out because premiums were too expensive. More than 1 in three, or 36 percent, of small businesses with between one and four employees opted out of coverage.

The largest industries with non-subscribers were healthcare with 39 percent of businesses opting out, wholesale at 33 percent and arts and entertainment at 32 percent.

But, of those who opt out of the state system, 30 percent said they offered some alternative form of workers’ compensation coverage.

The study pointed out, however, that the percentage of employees covered by the state system has remained consistently around 80 percent since 2010. In fact, that percentage has remained consistent since 2004, except for a drop to around 75 percent in 2008.

Texas is the only state where businesses are given the option to subscribe to the state system, and is the only state since 1913 to allow businesses the option to not have workers’ compensation insurance.

The study of the number of businesses that opt out of the state system has been conducted every two years since 1995. The random survey of businesses is run by the Workers’ Compensation Research and Evaluation Group. More than 2,370 businesses were interviewed by the Public Policy Research Institute at Texas A&M. Of those 1,711 were subscribers and 666 were non-subscribers. The study had a +/- 2.5 percent margin of error.

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