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Unemployment Insurance & Workers' Compensation

Unemployment Insurance
Businesses that employ one or more individuals may be subject to the state unemployment tax. In 2013, new employers pay 2.7% on the first $9,000 of wages per employee. A minimum of six quarters is required to obtain an experience rating in order to determine an employer's revised rate. The Texas Workforce Commission indicates that the effective tax rate in 2013 ranges from a minimum of 0.54% to a maximum of 7.35% for experienced-rated accounts and the average experience tax rate is 1.71%
Workers compensation is not mandatory in Texas.
The Texas Workers' Compensation Act limits a business' liability for job-related injuries if the employer has a workers' compensation policy from a licensed insurance carrier or has been certified to self-insure by the Texas Workers' Compensation Commission. 
Businesses without workers' compensation coverage—including those with alternative coverage—face unlimited liability if an employee is injured and can prove in court that the employer was negligent in any way.
If employers choose to provide workers' compensation, they must do so in one of the following ways:
  • buy a workers’ compensation insurance policy from an insurance company licensed by TDI,
  • be certified by TDI-DWC to self-insure workers’ compensation claims,
  • join a self-insurance group that has received a certificate of approval from TDI
The TDI publishes a rate guide to assist employers in comparison shopping for workers' compensation and employers' liability insurance in Texas. It identifies the rates filed by insurance carriers for Texas.
Texas has adopted a classification system for workers' compensation and employers' liability insurance which specifies approximately 400 classifications. All insurers must use the classifications contained in the Texas classification system.  Each employee's payroll is then assigned to the appropriate classification. The total payroll for each classification is then multiplied by the insurer's filed rate for that classification (rate per $100 payroll) to determine premium. The employer's basic premium is the sum of the individual classification premiums.
Employers who choose not to have workers' compensation insurance must:
  • file an annual notice with TDI-DWC,
  • display notices of non-coverage in the personnel office and throughout the workplace, and
  • give a written statement of non-coverage to each new employee.
For more information on the workers' compensation system in Texas click HERE.


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