Bill is an employee of a small manufacturing business in Amarillo. His job involves operating heavy machinery. One day he injures his back at work. He stays at home for a couple of days. When the pain doesn’t get better, he goes to his family physician, who sends Bill to a specialist, who recommends surgery. Bill has the surgery and misses three months of work. Bill’s medical treatment and lost wages amount to more than $50,000.

            This scenario or a variation of it happens every day in the workplaces across the Panhandle. And employers dread it every day.

            On the job injuries raise very difficult questions for an employer. Obviously you as the employer want your employees taken care of properly before and after an injury. But what will that cost the employer? Will Bill sue his employer? What if Bill’s accident happened because he was negligent in not following the safety rules?

            There are three options available to you as a small Texas employer to handle on-the-job injuries. You can subscribe to worker’s compensation insurance, you can buy a private insurance policy to cover on-the-job injuries or you can choose to “go bare” and hope for the best. Texas is one of the very few states that gives you these options and doesn’t require your participation in the worker’s compensation system.

Worker’s Compensation Insurance

            There are very good reasons for choosing to subscribe to the Texas Worker’s Compensation system. To be awarded government contracts you may have to subscribe. Subscribing will also give you the greatest peace of mind, because your injured employee will receive medical coverage for life for the injured body part and will be compensated for 70% of his lost wages while he recovers.

            Also, employees who are covered by traditional worker’s compensation insurance cannot sue their employers for the injury. They waive their right to sue in exchange for accepting worker’s compensation benefits.

            Of course, this freedom from suit by someone like Bill and this peace of mind that your employees are taken care of medically come at a high premium price through traditional worker’s compensation insurance companies, higher than some employers choose to pay.

Employers also believe that they have little control over the high costs of medical treatment through worker’s compensation or the ability to get an employee back to work whom the employer believes is malingering. The Texas Legislature addressed this in its most recent session by overhauling the medical treatment and fraud parts of the worker’s compensation laws. Whether these changes will make a significant difference in these problem areas is yet to be seen since they just went into effect September 1, 2005.

Going Without Any Coverage for On the Job Injuries

            If you as an employer choose not to subscribe to traditional worker’s compensation insurance for your employees’ protection, you are extremely exposed to lawsuits by someone like Bill. Nonsubscribers to worker’s compensation can be sued by their employees, and when they get to the courthouse, you as the employer are at a distinct disadvantage because you are penalized for not participating in the worker’s compensation system by losing some of your best defenses, such as contributory negligence (you cannot argue “it was Bill’s fault for not following our safety guidelines when he was injured”).

            Even with this downside of being impotent in the courtroom if you get sued, you as an employer may decide to opt out of the worker’s compensation system. You may believe that when Bill gets hurt you can pay his medical bills out of your own pocket (obviously not anticipating treatment to be expensive or unreasonable) or you may just let him try to pay them himself. Rarely is the employee satisfied with these choices, so he often will find a plaintiff’s personal injury lawyer to remedy the situation by suing your business.

Occupational Accident Insurance

            Employers who want a middle ground between “going bare” and paying for worker’s compensation insurance often look to alternative insurance policies to cover on-the-job injuries. An alternative policy is cheaper.  It may give you more ability to control fraud and medical costs. Many insurance companies will help you improve your safety programs. However, your employees can still sue you even if your private insurance pays them benefits.

Employers have tried to prevent these suits by having new employees sign a waiver that says that they won’t sue for injuries because they are offered this alternative insurance. This is a “pre-injury waiver”, which the Texas Legislature in the 2001 session decided to prohibit. So if you had your employees all sign a waiver at one time when they started working or when you first got the insurance in place, those waivers aren’t worth the paper they are printed on to protect you as an employer.

The other option employers have tried is to get an employee to sign a “post-injury waiver” after the accident occurs in exchange for having the expenses of treating the injury paid for by the private insurance policy.  The Texas Legislature figured out the problems with this, and so in the 2005 legislative session, they tightened up the rules regarding these post-injury waivers.

If Bill gets injured and you have an occupational accident policy, you now have to wait 10 days after the accident before asking Bill to sign a waiver of his right to sue the company. He has to have been evaluated by a doctor other than the emergency room physician before he signs the waiver for it to be valid. The waiver itself must be in large, colorful type and must be voluntarily signed by Bill with the clear understanding that he is waiving his right to sue in exchange for the benefits provided by the insurance policy.

If Bill will sign the post-injury waiver under these conditions, then your company is adequately protected by the occupational accident insurance. If Bill refuses to sign or if you don’t follow all these steps precisely, you will have wasted the dollars you spent on insurance premiums and will still have to pay attorneys fees and damages in Bill’s lawsuit. At that point, worker’s compensation insurance premiums don’t look too bad.