Employer Notice of No Coverage or Termination of Coverage in Texas Nonsubscriber Law
In Texas, the DWC-005 form, "Employer Notice of No Coverage or Termination of Coverage," is crucial for employers who opt out of workers' comp (non-subscribers) or end their policy, requiring notification to the Division of Workers' Compensation and employees, preventing potential penalties, and advising employees they forfeit certain rights, a vital legal step for non-covered businesses to manage liability and compliance in the unique Texas system.
Who Files and Why: The Non-Subscriber's Responsibility
Texas is unique because it doesn't mandate workers' comp, allowing employers to "opt-out" but making them "non-subscribers". If you choose this path, or if you cancel your policy, you must file DWC-005, notifying the Texas Department of Insurance (TDI) and your employees, establishing your status as a non-subscriber. Failure to do so can lead to significant administrative fines, making this a critical compliance piece for non-covered entities.
The Stakes for Non-Subscribers
By filing this form, you're formally informing workers they don't have coverage, but you're also choosing to lose common defenses against injury lawsuits, like arguing the employee was at fault or the injury wasn't work-related. This places you in a much riskier position, as injured employees can still sue for damages under common-law negligence, potentially facing much higher payouts than traditional workers' comp.
Key Filing Requirements & Exemptions
The rule applies to most employers, but there are exceptions, such as certain domestic or farm/ranch workers, notes. The form is filed when a business becomes a non-subscriber and must be re-filed if the company ever reinstates coverage and then drops it again, ensuring continuous notification.
An Attorney's Perspective: Risk Management
From an attorney's viewpoint, this form isn't just paperwork; it's a cornerstone of risk management for non-subscribers. It's about understanding the legal trade-offs: avoiding premium costs for insurance but accepting increased exposure to employee lawsuits. Proper filing, coupled with strong safety programs and clear employee communication, helps mitigate the severe risks associated with not carrying workers' compensation in Texas.
The Importance of Timely Filing
Don't delay; the TDI expects prompt action. Filing DWC-005 correctly and on time protects your business from penalties and provides crucial transparency to your workforce, even if it highlights the risks you're undertaking by remaining a non-subscriber in Texas.
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