As summer winds down, many Texas businesses shift back into a busier routine. Employees return from vacations, projects pick up, seasonal hiring may increase, and companies begin preparing for the final months of the year.
For growing businesses, this is also a good time to review Workers’ Compensation Insurance coverage in Texas. Changes in your workforce, payroll, job duties, or business operations can affect your workers’ compensation needs. A policy review can help ensure your coverage continues to align with how your business operates today.
Why Growing Businesses Should Review Workers’ Compensation Coverage
Texas differs from most states in workers’ compensation. Texas generally does not require most private employers to carry workers’ compensation insurance. However, employers that choose not to carry it may face additional legal and financial considerations, including potential liability for workplace injuries.
According to the Texas Department of Insurance, private employers can generally choose whether to carry workers’ compensation insurance, while certain employers and industries may have different requirements. Employers that subscribe to workers’ compensation receive important protections under Texas law, while nonsubscribers can face greater exposure to employee injury claims.
That makes understanding your options especially important as your company grows.
A business that started with a handful of employees may have very different risks after adding new workers, expanding locations, purchasing equipment, or taking on more complex projects.
Has Your Workforce Changed?
One of the first things to review is your current workforce.
If you’ve hired employees since your last policy review, make sure your payroll estimates and employee classifications accurately reflect your business. Growth can also introduce new positions with different levels of workplace exposure.
For example, an office-based company that adds warehouse employees may have a substantially different workers’ compensation risk profile. Likewise, a contractor that takes on larger projects may have employees performing more physically demanding tasks or working in different environments.
Your workers’ compensation policy should reflect the actual work your employees perform.
Review Employee Classifications and Job Duties
Workers’ compensation premiums are influenced by factors such as employee classifications, payroll, and the type of work being performed.
As your company expands, job responsibilities can change. An employee who originally performed administrative duties might begin spending a significant amount of time in the field. New employees may also be assigned to different operations than those listed when the policy was originally issued.
Reviewing employee classifications with your insurance professional can help identify discrepancies before they create complications.
This is particularly relevant for Texas businesses in industries such as construction, manufacturing, transportation, hospitality, retail, and other fields where employees may face greater workplace hazards.
Don’t Forget About Payroll Changes
Business growth often means payroll growth.
If you’ve hired more employees, increased wages, added overtime, or expanded operations, your payroll may be significantly different from the estimate used when your policy was established.
An annual workers’ compensation review can help ensure payroll information is accurate and help reduce the likelihood of an unexpected adjustment during an audit.
The Texas Department of Insurance notes that workers’ compensation premiums can be affected by payroll and employee classifications. Keeping your records accurate and communicating changes to your insurance agent can make the process easier.
Are You Using Contractors or Subcontractors?
Growing companies sometimes rely more heavily on independent contractors or subcontractors as workloads increase.
However, the distinction between an employee and an independent contractor can be complicated. Simply calling someone a contractor does not necessarily determine their legal classification.
The Texas Workforce Commission provides guidance on worker classification and explains factors to consider when determining whether a worker is an employee or an independent contractor.
If your business regularly uses contractors, discuss your arrangement with your insurance professional and appropriate legal or tax advisers. You should also understand how certificates of insurance and subcontractor workers’ compensation coverage may affect your risk.
Strengthen Workplace Safety Alongside Insurance
Workers’ compensation insurance is only one part of a broader workplace risk management strategy.
Businesses can also reduce workplace injury risks by maintaining safety procedures, training employees, documenting incidents, and regularly reviewing hazards.
The Occupational Safety and Health Administration (OSHA) provides resources covering workplace safety, hazard identification, training, and injury prevention.
For growing companies, safety programs can be especially important because new employees may not be familiar with your procedures, equipment, or work environment.
Make Workers’ Compensation Part of Your Annual Business Review
Back-to-business season is a natural opportunity to review your company’s insurance from a fresh perspective.
Ask:
- Have you added or removed employees?
- Has your payroll changed significantly?
- Have employee job duties changed?
- Have you opened another location?
- Are you using more contractors or subcontractors?
- Have you purchased new equipment?
- Have you expanded into new services or markets?
- Are your workplace safety procedures still appropriate?
If the answer to any of these questions is yes, it may be time for a workers’ compensation coverage review.
Review Your Workers’ Compensation Options with Pierce Insurance Group
Your business is changing, and your insurance should keep up.
Pierce Insurance Group can help Texas business owners review their Workers’ Compensation Insurance needs and better understand how coverage fits into their broader business insurance strategy. Whether you’re hiring your first employees or expanding an established operation, a professional policy review can help you identify potential gaps and make informed decisions.
Don’t wait until the next workplace injury or policy audit to review your coverage. Contact us today at (469) 252-8001 to discuss your workers’ compensation and business insurance needs.
Also read: What Would Be Considered a Workers’ Compensation Injury?
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Frequently Asked Questions (FAQs)
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Is workers’ compensation insurance required for Texas businesses?
Texas generally does not require most private employers to carry workers’ compensation insurance, although exceptions and specific requirements may apply.
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Does workers’ compensation cover independent contractors?
Generally, workers’ compensation is designed for covered employees. Whether someone is legally an employee or independent contractor depends on the circumstances.
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Why should businesses review workers’ compensation coverage after hiring employees?
New employees, changing job duties, and increased payroll can affect classifications, premiums, and coverage needs.
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What does workers’ compensation generally cover?
For covered employees, workers’ compensation can provide benefits related to qualifying work-related injuries or illnesses, subject to applicable laws and policy terms.