Texas Fights over State-Created Firm, Texas Mutual Insurance Company

              In 1991, Texas employers sought policy writers to create polices covering employees injured on the job. To fuel this need, the Texas legislature created the Texas Workers’ Compensation Insurance Fund, the largest writer of workers’ compensation insurance. In 2001, the state changed the fund's name to Texas Mutual Insurance Company (TMIC) but maintained the same goal: to stabilize the state’s workers’ compensation system. Since its creation, TMIC has accomplished just that, consuming 40% of Texas’s workers’ compensation insurance market. Today, TMIC insures over 60,000 employers and their 1.4 million employees. Despite its success, TMIC recently announced its desire to cut ties with the state. The purpose of this blog is to explain some of the pros and cons associated with converting the state fund into a private company.  

 

Pros of Ending State Involvement

  • TMIC policyholders would have the authority to appoint all board directors
  • State officials would no longer covet the company’s $2 billion net wort
  • If Texas sold TMIC to a private company, the state could use the sale proceeds to create a Rainy Day Fund
  • Legislators would be estopped from spending TMIC’s future earnings on the state

 

Cons of Ending State Involvement

  • Separation would eliminate oversight by the attorney general, legislative review, and state audits, giving TMIC increased control
  • Texas would force TMIC to pay federal income taxes, making insurance more expensive and less attractive to employers
  • This conversion could drive up rates, potentially disrupting the workers’ compensation market and making Texas less competitive

 

To learn more, read the full article here: http://insurancenewsnet.com/oarticle/2014/11/01/insurance-war-state-created-firm-now-wants-full-freedom-a-571351.html#.VFkCQlaSHwJ 

Workers' Compensation: Are you Covered?

            Workers’ compensation is a state-regulated insurance program that pays medical expenses and lost wages of employees who are injured at work or suffer from work-related illnesses. Workers’ compensation cases are treated on a case-by-case basis, which means that employees are treated differently based on the nature and severity of their injuries.

              In Texas, the agency responsible for regulating the state’s workers’ compensation system is the Texas Department of Insurance (TDI). Within the TDI exists a smaller division, which carries the sole responsibility of processing and monitoring workers’ compensation claims, called the Division of Workers’ Compensation (DWC).

            The DWC will not compensate all employees suffering from work-related injuries. To receive benefits, employees must meet two requirements: (1) fall under their employers’ workers’ compensation coverage and (2) suffer from certain work-related injuries.

 

                                Requirement #1: Workers' Comp Insurance

              First, employees must fall under their employers’ workers’ compensation coverage. In Texas, workers’ compensation insurance is optional, so not all employees automatically receive coverage. Employers have an incentive to provide coverage because insured employers receive important legal protections, including immunity from most lawsuits brought by employees. This means that employees, generally, cannot sue their employers for work-related injuries.  Instead, employees must go through the Texas Department of Insurance and/or bring a third-party lawsuit. The purpose of employer immunity is to establish a trade-off between employers and injured employees. Injured employees give up their right to sue employers, in exchange for the right to receive workers' compensation benefits, regardless of who was at fault for their injuries.

 

                          Requirement #2: Injured in the Course of Employment

             Second, employees must suffer from certain types work-related injuries. The Texas Labor Code requires employees seeking workers’ compensation benefits suffer from injuries “out of and in the course and scope of employment.” This means that employees must sustain their injuries while working in furtherance of their employers. Determining when employees work in furtherance of their employers and when they do not is a complicated issue, which is why injured employees should contact an attorney who specializes in workers’ compensation or personal injury cases.

               Injured employees who do not contact an attorney must, at the bare minimum, report their injury to their employer within thirty days from the date of the injury, or from the date they discovered that their injury related to their employment. Failing to notify employers within thirty days can eliminate an employee’s right to obtain benefits.

 

                                   Takeaway Points for Injured Employees 

  • In Texas, the DWC, within the TDI, handles all workers’ compensation cases
  • Texas employers have the option of providing workers’ compensation insurance, so not all employees receive coverage
  • Employees seeking benefits must fall under their employers’ coverage
  • Employees must sustain their injuries while working in furtherance of their employer’s business
  • Workers’ compensation will not pay for injuries caused by self-infliction, horseplay, voluntary drug or alcohol intoxication, or injuries sustained off-duty or during social events or sporting events
  • Generally, employees have thirty days to report their injuries  
    

What to Watch For if You Are an Independent Contractor

According to a New York Times article, the feds are cracking down on employers that classify employees as independent contractors. 

Classifying regular workers as independent contractors allows companies to get around minimum wage, overtime and antidiscrimination laws. Workers classified as independent contractors also do not receive unemployment insurance if laid off or workers’ compensation if injured, and they rarely receive the health insurance or other fringe benefits regular employees do. Of course, this results in substantial savings for the employer. According to the article, the most often misclassified workers are truck drivers, construction workers, home health aides and high-tech engineers. 

Sometimes, though, the employer may have to provide workers compensation coverage to employees in order to bid on government contracts. Or, in the construction field, a contractor may require a subcontractor to furnish workers compensation coverage for employees in order to protect the contractor. Sometimes in these situations the employer will provide workers compensation coverage but will deduct the premiums from the compensation paid to workers classified as independent contractors. In these situations, very specific rules apply for the employer to classify the workers as independent contractors. Otherwise, it is illegal to withhold workers compensation premiums from a worker's check. At our offices, we currently represent a group of employees who faced this very problem. Tens of thousands of dollars were withheld from the workers to pay workers compensation premiums.

If your employer classifies you as an independent contractor, make sure you are truly independent. Who has the right to control your work? Do you have the ability to independently profit from your work? Have you made a significant investment in equipment or supplies to perform your work? Is your work with your current employer temporary? Who sets the hours? Who sets the pay? Now, if you are truly and independent contractor, look at the check you receive and see what is taken out. If workers compensation premiums are withheld, see a lawyer to determine if it is legal for you to be required to pay the premiums from your check.