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Workers' compensation is a state-regulated insurance program that pays medical bills and replaces some lost wages for employees who are hurt at work or who have a work-related illness.
Workers' compensation pays for the medical treatment of an injury or illness if:
- The injury happened at work or the illness is job-related; and
- The worker's employer has workers' compensation insurance or is certified by the Texas Department of Insurance (TDI) to self-insure.
Workers' compensation will also replace some of the worker's lost wages if the injury or illness caused the worker to lose some or all income for more than seven days.
Texas employers may choose whether to have workers' compensation insurance. Employers who choose to have insurance may:
- Buy insurance policies from private insurance companies; or
- Self-insure, if they meet the requirements of the Texas Workers' Compensation Act and are certified by TDI. Self-insured employers have the same rights and responsibilities as employers who buy policies from private insurance companies.
History of workers’ compensation
The premise of workers’ compensation came about during the Industrial Revolution and was known as the Grand Bargain, a compromise between employers and employees.
Workers’ compensation insurance protects employers from potentially crippling lawsuits brought by injured employees. In return for giving up their right to sue, employees are entitled to prompt, no-cost medical treatment for their work-related injury or illness and income benefits to replace some of their lost wages. The system also includes income benefits for beneficiaries of an employee who dies from a work-related injury.
Today, Texas is the only state that allows private employers to choose whether to provide workers' compensation coverage for their employees.
Learn more about the long history of workers’ compensation in Texas.