Texas nonsubscription is frequently viewed as an anomaly within the industrialized world. Historical context is required to both understand its roots and appreciate its modern-day viability. That the employer/employee relationship is unique in nature is obvious; but the legal duties an employer has owed its employees has been less obvious historically. Case law for employer liability dates back over 1000 years, and if employees were lucky enough to live in advanced societies governed by law they could sue their employers for bodily injury. Employers could use various tactics in resisting these claims, including some common law defenses.
Through the centuries, outcomes of workplace injuries lacked consistency. The Industrial Revolution slowly changed how society viewed employer liability. By the early 20th century in the US, most states had adopted various forms of a new "Grand Bargain" called workers' compensation (WC). Initially, as states enacted this new legislation, employers had the choice of opting into a state's WC system.
When Texas passed its Workers Compensation Act of 1913, it was far from anomalous. As it allowed employers the option to choose WC, it was perfectly in line with other states. But by the late 1970s, all other states had essentially tightened up their respective laws to require virtually all employers to provide WC insurance for their employees. In fact, until PPACA passed in 2010, WC was effectively the only "employee benefit" US employers were legally required to fund. Texas, therefore, is anomalous not for what it did, but rather for what it never did: follow suit and make WC mandatory. Texas is anomalous not for legislating and managing two competing workplace injury systems, but rather for allowing a wildly successful alternative to develop using free-market approaches under distinct employer liability jurisprudence standards. Texas nonsubscription is one of the contributing factors to the state's decades-old economic growth engine.
Over the past century, the 50 separate WC systems run by each state have developed their own complexities. But the complexities of WC are almost never centered around employer liability--one of the key goals sought by the Grand Bargain to begin with. Texas nonsubscription has developed its own complexities for more than the past century, much of which centers around its singularly unique handling of employer liability.
Workers Compensation Options is here to help employers understand the pros and cons of Texas nonsubscription for its Texas payrolls.