CHAPTER 406. WORKERS' COMPENSATION INSURANCE COVERAGE

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LABOR CODE

TITLE 5. WORKERS' COMPENSATION

SUBTITLE A. TEXAS WORKERS' COMPENSATION ACT

CHAPTER 406. WORKERS' COMPENSATION INSURANCE COVERAGE

SUBCHAPTER A. COVERAGE ELECTION; SECURITY PROCEDURES

Sec. 406.001. DEFINITION. In this subchapter, "employer" means

a person who employs one or more employees.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.002. COVERAGE GENERALLY ELECTIVE. (a) Except for

public employers and as otherwise provided by law, an employer

may elect to obtain workers' compensation insurance coverage.

(b) An employer who elects to obtain coverage is subject to this

subtitle.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.003. METHODS OF OBTAINING COVERAGE. An employer may

obtain workers' compensation insurance coverage through a

licensed insurance company or through self-insurance as provided

by this subtitle.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.004. EMPLOYER NOTICE TO DIVISION. (a) An employer who

does not obtain workers' compensation insurance coverage shall

notify the division in writing, in the time and as prescribed by

commissioner rule, that the employer elects not to obtain

coverage.

(b) The commissioner shall prescribe forms to be used for the

employer notification and shall require the employer to provide

reasonable information to the division about the employer's

business.

Commission or the comptroller for assistance in collecting the

notification required under this section. Those agencies shall

cooperate with the division in enforcing this section.

(d) The employer notification filing required under this section

shall be filed with the division in accordance with Section

406.009.

(e) An employer commits an administrative violation if the

employer fails to comply with this section.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 9.47(a), eff. Sept.

1, 1995.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.023, eff. September 1, 2005.

Sec. 406.005. EMPLOYER NOTICE TO EMPLOYEES; ADMINISTRATIVE

VIOLATION. (a) An employer shall notify each employee as

provided by this section whether or not the employer has workers'

compensation insurance coverage.

(b) The employer shall notify a new employee of the existence or

absence of workers' compensation insurance coverage at the time

the employee is hired.

has workers' compensation insurance coverage at conspicuous

locations at the employer's place of business as necessary to

provide reasonable notice to the employees. The commissioner may

adopt rules relating to the form and content of the notice. The

employer shall revise the notice when the information contained

in the notice is changed.

(d) An employer who obtains workers' compensation insurance

coverage or whose coverage is terminated or canceled shall notify

each employee that the coverage has been obtained, terminated, or

canceled not later than the 15th day after the date on which the

coverage, or the termination or cancellation of the coverage,

takes effect.

(e) An employer commits an administrative violation if the

employer fails to comply with this section.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.024, eff. September 1, 2005.

Sec. 406.006. INSURANCE COVERAGE AND CLAIM ADMINISTRATION

REPORTING REQUIREMENTS; ADMINISTRATIVE VIOLATION. (a) An

insurance company from which an employer has obtained workers'

compensation insurance coverage, a certified self-insurer, a

workers' compensation self-insurance group under Chapter 407A,

and a political subdivision shall file notice of the coverage and

claim administration contact information with the division not

later than the 10th day after the date on which the coverage or

claim administration agreement takes effect, unless the

commissioner adopts a rule establishing a later date for filing.

Coverage takes effect on the date on which a binder is issued, a

later date and time agreed to by the parties, on the date

provided by the certificate of self-insurance, or on the date

provided in an interlocal agreement that provides for

self-insurance. The commissioner may adopt rules that establish

the coverage and claim administration contact information

required under this subsection.

(b) The notice required under this section shall be filed with

the division in accordance with Section 406.009.

compensation self-insurance group under Chapter 407A, or a

political subdivision commits an administrative violation if the

person fails to file notice with the division as provided by this

section.

(d) In this section, "political subdivision" has the meaning

assigned by Section 504.001.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 9.48(a), eff. Sept.

1, 1995; Acts 1999, 76th Leg., ch. 954, Sec. 2.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.025, eff. September 1, 2005.

Sec. 406.007. TERMINATION OF COVERAGE BY EMPLOYER; NOTICE. (a)

An employer who terminates workers' compensation insurance

coverage obtained under this subtitle shall file a written notice

with the division by certified mail not later than the 10th day

after the date on which the employer notified the insurance

carrier to terminate the coverage. The notice must include a

statement certifying the date that notice was provided or will be

provided to affected employees under Section 406.005.

(b) The notice required under this section shall be filed with

the division in accordance with Section 406.009.

(1) the 30th day after the date of filing of notice with the

division under Subsection (a); or

(2) the cancellation date of the policy.

(d) The coverage shall be extended until the date on which the

termination of coverage takes effect, and the employer is

obligated for premiums due for that period.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 9.49(a), eff. Sept.

1, 1995.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.026, eff. September 1, 2005.

Sec. 406.008. CANCELLATION OR NONRENEWAL OF COVERAGE BY

INSURANCE COMPANY; NOTICE. (a) An insurance company that

cancels a policy of workers' compensation insurance or that does

not renew the policy by the anniversary date of the policy shall

deliver notice of the cancellation or nonrenewal by certified

mail or in person to the employer and the division not later

than:

(1) the 30th day before the date on which the cancellation or

nonrenewal takes effect; or

(2) the 10th day before the date on which the cancellation or

nonrenewal takes effect if the insurance company cancels or does

not renew because of:

(A) fraud in obtaining coverage;

(B) misrepresentation of the amount of payroll for purposes of

premium calculation;

(D) an increase in the hazard for which the employer seeks

coverage that results from an act or omission of the employer and

that would produce an increase in the rate, including an increase

because of a failure to comply with:

(i) reasonable recommendations for loss control; or

(ii) recommendations designed to reduce a hazard under the

employer's control within a reasonable period; or

(E) a determination made by the commissioner of insurance that

the continuation of the policy would place the insurer in

violation of the law or would be hazardous to the interest of

subscribers, creditors, or the general public.

(b) The notice required under this section shall be filed with

the division.

by this section extends the policy until the date on which the

required notice is provided to the employer and the division.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 9.50(a), eff. Sept.

1, 1995.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.027, eff. September 1, 2005.

Sec. 406.009. COLLECTING AND MAINTAINING INFORMATION; MONITORING

AND ENFORCING COMPLIANCE. (a) The division shall collect and

maintain the information required under this subchapter and shall

monitor compliance with the requirements of this subchapter.

(b) The commissioner may adopt rules as necessary to enforce

this subchapter.

implement an electronic reporting and public information access

program, and adopt rules as necessary to implement the data

collection requirements of this subchapter. The commissioner may

establish the form, manner, and procedure for the transmission of

information to the division.

(d) The division may require an employer or insurance carrier

subject to this subtitle to identify or confirm an employer's

coverage status and claim administration contact information as

necessary to achieve the purposes of this subtitle.

(e) An employer or insurance carrier commits an administrative

violation if that person fails to comply with Subsection (d).

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 76, Sec. 9.51(a), eff. Sept.

1, 1995; Acts 1999, 76th Leg., ch. 954, Sec. 3, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.028, eff. September 1, 2005.

Sec. 406.010. CLAIMS SERVICE; ADMINISTRATIVE VIOLATION. (a) An

insurance carrier shall provide claims service:

(1) through offices of the insurance carrier located in this

state; or

(2) by other resident representatives with full power to act for

the insurance carrier.

(b) Each insurance carrier shall designate persons to provide

claims service in sufficient numbers and at appropriate locations

to reasonably service policies written by the carrier. If an

insurance carrier uses the services of a person required to hold

a certificate of authority under Chapter 4151, Insurance Code,

the carrier must comply with the requirements of that chapter.

requirements of this section.

(d) A person commits an administrative violation if the person

violates a rule adopted under this section.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.029, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

1176, Sec. 3.01, eff. September 1, 2007.

Sec. 406.011. AUSTIN REPRESENTATIVE; ADMINISTRATIVE VIOLATION.

(a) The commissioner by rule may require an insurance carrier to

designate a representative in Austin to act as the insurance

carrier's agent before the division in Austin. Notice to the

designated agent constitutes notice to the insurance carrier.

(b) A person commits an administrative violation if the person

violates a rule adopted under this section.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.030, eff. September 1, 2005.

Sec. 406.012. ENFORCEMENT OF SUBCHAPTER. The commission shall

enforce the administrative penalties established under this

subchapter in accordance with Chapter 415.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

SUBCHAPTER B. COVERAGE REQUIREMENTS

Sec. 406.031. LIABILITY FOR COMPENSATION. (a) An insurance

carrier is liable for compensation for an employee's injury

without regard to fault or negligence if:

(1) at the time of injury, the employee is subject to this

subtitle; and

(2) the injury arises out of and in the course and scope of

employment.

(b) If an injury is an occupational disease, the employer in

whose employ the employee was last injuriously exposed to the

hazards of the disease is considered to be the employer of the

employee under this subtitle.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.032. EXCEPTIONS. An insurance carrier is not liable

for compensation if:

(1) the injury:

(A) occurred while the employee was in a state of intoxication;

(B) was caused by the employee's wilful attempt to injure

himself or to unlawfully injure another person;

employee because of a personal reason and not directed at the

employee as an employee or because of the employment;

(D) arose out of voluntary participation in an off-duty

recreational, social, or athletic activity that did not

constitute part of the employee's work-related duties, unless the

activity is a reasonable expectancy of or is expressly or

impliedly required by the employment; or

(E) arose out of an act of God, unless the employment exposes

the employee to a greater risk of injury from an act of God than

ordinarily applies to the general public; or

(2) the employee's horseplay was a producing cause of the

injury.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.033. COMMON-LAW DEFENSES; BURDEN OF PROOF. (a) In an

action against an employer who does not have workers'

compensation insurance coverage to recover damages for personal

injuries or death sustained by an employee in the course and

scope of the employment, it is not a defense that:

(1) the employee was guilty of contributory negligence;

(2) the employee assumed the risk of injury or death; or

(3) the injury or death was caused by the negligence of a fellow

employee.

(b) This section does not reinstate or otherwise affect the

availability of defenses at common law, including the defenses

described by Subsection (a).

injury was caused:

(1) by an act of the employee intended to bring about the

injury; or

(2) while the employee was in a state of intoxication.

(d) In an action described by Subsection (a) against an employer

who does not have workers' compensation insurance coverage, the

plaintiff must prove negligence of the employer or of an agent or

servant of the employer acting within the general scope of the

agent's or servant's employment.

(e) A cause of action described in Subsection (a) may not be

waived by an employee before the employee's injury or death. Any

agreement by an employee to waive a cause of action or any right

described in Subsection (a) before the employee's injury or death

is void and unenforceable.

(f) A cause of action described by Subsection (a) may not be

waived by an employee after the employee's injury unless:

(1) the employee voluntarily enters into the waiver with

knowledge of the waiver's effect;

(2) the waiver is entered into not earlier than the 10th

business day after the date of the initial report of injury;

(3) the employee, before signing the waiver, has received a

medical evaluation from a nonemergency care doctor; and

(4) the waiver is in a writing under which the true intent of

the parties is specifically stated in the document.

(g) The waiver provisions required under Subsection (f) must be

conspicuous and appear on the face of the agreement. To be

conspicuous, the waiver provisions must appear in a type larger

than the type contained in the body of the agreement or in

contrasting colors.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 2001, 77th Leg., ch. 1456, Sec. 16.01, eff. June

17, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.031, eff. September 1, 2005.

Sec. 406.034. EMPLOYEE ELECTION. (a) Except as otherwise

provided by law, unless the employee gives notice as provided by

Subsection (b), an employee of an employer waives the employee's

right of action at common law or under a statute of this state to

recover damages for personal injuries or death sustained in the

course and scope of the employment.

(b) An employee who desires to retain the common-law right of

action to recover damages for personal injuries or death shall

notify the employer in writing that the employee waives coverage

under this subtitle and retains all rights of action under common

law. The employee must notify the employer not later than the

fifth day after the date on which the employee:

(1) begins the employment; or

(2) receives written notice from the employer that the employer

has obtained workers' compensation insurance coverage if the

employer is not a covered employer at the time of the employment

but later obtains the coverage.

rights under this section as a condition of employment.

(d) An employee who elects to retain the right of action or a

legal beneficiary of that employee may bring a cause of action

for damages for injuries sustained in the course and scope of the

employment under common law or under a statute of this state.

Notwithstanding Section 406.033, the cause of action is subject

to all defenses available under common law and the statutes of

this state.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.035. WAIVER OF COMPENSATION PROHIBITED. Except as

provided by this subtitle, an agreement by an employee to waive

the employee's right to compensation is void.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

SUBCHAPTER C. COVERAGE THROUGH COMMERCIAL INSURANCE

Sec. 406.051. SECURITY BY COMMERCIAL INSURANCE. (a) An

insurance company may contract to secure an employer's liability

and obligations and to pay compensation by issuing a workers'

compensation insurance policy under this subchapter.

(b) The contract for coverage must be written on a policy and

endorsements approved by the Texas Department of Insurance.

(1) the obligation to accept a report of injury under Section

409.001;

(2) the obligation to maintain records of injuries under Section

409.006;

(3) the obligation to report injuries to the insurance carrier

under Section 409.005;

(4) liability for a violation of Section 415.006 or 415.008 or

of Chapter 451; or

(5) the obligation to comply with a commissioner order.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1999, 76th Leg., ch. 954, Sec. 4, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.032, eff. September 1, 2005.

Sec. 406.052. EFFECT OF OTHER INSURANCE COVERAGE. (a) A

contract entered into to indemnify an employer from loss or

damage resulting from an injury sustained by an employee that is

compensable under this subtitle is void unless the contract also

covers liability for payment of compensation under this subtitle.

(b) This section does not prohibit an employer who is not

required to have workers' compensation insurance coverage and who

has elected not to obtain workers' compensation insurance

coverage from obtaining insurance coverage on the employer's

employees if the insurance is not represented to any person as

providing workers' compensation insurance coverage authorized

under this subtitle.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.053. ALL STATES COVERAGE. The Texas Department of

Insurance shall coordinate with the appropriate agencies of other

states to:

(1) share information regarding an employer who obtains all

states coverage; and

(2) ensure that the department has knowledge of an employer who

obtains all states coverage in another state but fails to file

notice with the department.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

SUBCHAPTER D. EXTRATERRITORIAL COVERAGE

Sec. 406.071. EXTRATERRITORIAL COVERAGE. (a) An employee who

is injured while working in another jurisdiction or the

employee's legal beneficiary is entitled to all rights and

remedies under this subtitle if:

(1) the injury would be compensable if it had occurred in this

state; and

(2) the employee has significant contacts with this state or the

employment is principally located in this state.

(b) An employee has significant contacts with this state if the

employee was hired or recruited in this state and the employee:

(1) was injured not later than one year after the date of hire;

(2) has worked in this state for at least 10 working days during

the 12 months preceding the date of injury.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.072. PRINCIPAL LOCATION. The principal location of a

person's employment is where:

(1) the employer has a place of business at or from which the

employee regularly works; or

(2) the employee resides and spends a substantial part of the

employee's working time.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.073. AGREEMENT ON PRINCIPAL LOCATION; ADMINISTRATIVE

VIOLATION. (a) An employee whose work requires regular travel

between this state and at least one other jurisdiction may agree

in writing with the employer on the principal location of the

employment.

(b) The employer shall file the agreement with the division on

request.

violates Subsection (b).

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.033, eff. September 1, 2005.

Sec. 406.074. INTERJURISDICTIONAL AGREEMENTS. (a) The

commissioner may enter into an agreement with an appropriate

agency of another jurisdiction with respect to:

(1) conflicts of jurisdiction;

(2) assumption of jurisdiction in a case in which the contract

of employment arises in one state and the injury is incurred in

another;

(3) procedures for proceeding against a foreign employer who

fails to comply with this subtitle; and

(4) procedures for the appropriate agency to use to proceed

against an employer of this state who fails to comply with the

workers' compensation laws of the other jurisdiction.

(b) An executed agreement that has been adopted as a rule by the

commissioner binds all subject employers and employees.

another jurisdiction that administers the workers' compensation

laws of that jurisdiction.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.034, eff. September 1, 2005.

Sec. 406.075. EFFECT OF COMPENSATION PAID IN OTHER JURISDICTION.

(a) An injured employee who elects to pursue the employee's

remedy under the workers' compensation laws of another

jurisdiction and who recovers benefits under those laws may not

recover under this subtitle.

(b) The amount of benefits accepted under the laws of the other

jurisdiction without an election under Subsection (a) shall be

credited against the benefits that the employee would have

received had the claim been made under this subtitle.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

SUBCHAPTER E. APPLICATION OF COVERAGE TO CERTAIN EMPLOYEES

Sec. 406.091. EXEMPT EMPLOYEES; VOLUNTARY COVERAGE. (a) The

following employees are not subject to this subtitle:

(1) a person employed as a domestic worker or a casual worker

engaged in employment incidental to a personal residence;

(2) a person covered by a method of compensation established

under federal law; or

(3) except as provided by Subchapter H, a farm or ranch

employee.

(b) An employer may elect to obtain workers' compensation

insurance coverage for an employee or classification of employees

exempted from coverage under Subsection (a)(1) or (a)(3).

Obtaining that coverage constitutes acceptance by the employer of

the rights and responsibilities imposed under this subtitle as of

the effective date of the coverage for as long as the coverage

remains in effect.

employees is not deprived of the common-law defenses described by

Section 406.033, but this section does not reinstate or otherwise

affect the availability of those or other defenses at common law.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.092. ALIEN EMPLOYEES AND BENEFICIARIES. (a) A

resident or nonresident alien employee or legal beneficiary is

entitled to compensation under this subtitle.

(b) A nonresident alien employee or legal beneficiary, at the

election of the employee or legal beneficiary, may be represented

officially by a consular officer of the country of which the

employee or legal beneficiary is a citizen. That officer may

receive benefit payments for distribution to the employee or

legal beneficiary. The receipt of the payments constitutes full

discharge of the insurance carrier's liability for those

payments.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.093. LEGALLY INCOMPETENT EMPLOYEES. (a) The guardian

of an injured employee who is a minor or is otherwise legally

incompetent may exercise on the employee's behalf the rights and

privileges granted to the employee under this subtitle.

(b) The commissioner by rule shall adopt procedures relating to

the method of payment of benefits to legally incompetent

employees.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.035, eff. September 1, 2005.

Sec. 406.094. CERTAIN PERSONS LICENSED BY TEXAS REAL ESTATE

COMMISSION. (a) An employer who elects to provide workers'

compensation insurance coverage may include in the coverage a

real estate salesperson or broker who is:

(1) licensed under Chapter 1101, Occupations Code; and

(2) compensated solely by commissions.

(b) If coverage is elected by the employer, the insurance policy

must specifically name the salesperson or broker. The coverage

continues while the policy is in effect and the named salesperson

or broker is endorsed on the policy.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 14A.788, eff.

Sept. 1, 2003.

Sec. 406.095. CERTAIN PROFESSIONAL ATHLETES. (a) A

professional athlete employed under a contract for hire or a

collective bargaining agreement who is entitled to benefits for

medical care and weekly benefits that are equal to or greater

than the benefits provided under this subtitle may not receive

benefits under this subtitle and the equivalent benefits under

the contract or collective bargaining agreement. An athlete

covered by such a contract or agreement who sustains an injury in

the course and scope of the athlete's employment shall elect to

receive either the benefits available under this subtitle or the

benefits under the contract or agreement.

(b) The commissioner by rule shall establish the procedures and

requirements for an election under this section.

employed as a professional athlete by a franchise of:

(1) the National Football League;

(2) the National Basketball Association;

(3) the American League of Professional Baseball Clubs;

(4) the National League of Professional Baseball Clubs;

(5) the International Hockey League;

(6) the National Hockey League; or

(7) the Central Hockey League.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1995, 74th Leg., ch. 668, Sec. 1, eff. Sept. 1,

1995.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.036, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

815, Sec. 1, eff. September 1, 2005.

Sec. 406.096. REQUIRED COVERAGE FOR CERTAIN BUILDING OR

CONSTRUCTION CONTRACTORS. (a) A governmental entity that enters

into a building or construction contract shall require the

contractor to certify in writing that the contractor provides

workers' compensation insurance coverage for each employee of the

contractor employed on the public project.

(b) Each subcontractor on the public project shall provide such

a certificate relating to coverage of the subcontractor's

employees to the general contractor, who shall provide the

subcontractor's certificate to the governmental entity.

compensation insurance coverage may provide the coverage through

a group plan or other method satisfactory to the governing body

of the governmental entity.

(d) The employment of a maintenance employee by an employer who

is not engaging in building or construction as the employer's

primary business does not constitute engaging in building or

construction.

(e) In this section:

(1) "Building or construction" includes:

(A) erecting or preparing to erect a structure, including a

building, bridge, roadway, public utility facility, or related

appurtenance;

(B) remodeling, extending, repairing, or demolishing a

structure; or

property through similar activities.

(2) "Governmental entity" means this state or a political

subdivision of this state. The term includes a municipality.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.097. EXECUTIVE EMPLOYEES OF CERTAIN BUSINESS ENTITIES.

(a) A sole proprietor, partner, or corporate executive officer

of a business entity that elects to provide workers' compensation

insurance coverage is entitled to benefits under that coverage as

an employee unless the sole proprietor, partner, or corporate

executive officer is specifically excluded from coverage through

an endorsement to the insurance policy or certificate of

authority to self-insure.

(b) The dual capacity doctrine does not apply to a corporate

executive officer with an equity ownership in the covered

business entity of at least 25 percent and will not invalidate

the exclusion of such a corporate executive officer from coverage

under Subsection (a).

a corporate officer with an equity ownership in a covered

business entity of at least 25 percent may be excluded from

coverage under this section notwithstanding Section 406.096.

Added by Acts 1995, 74th Leg., ch. 980, Sec. 1.20, eff. Sept. 1,

1995.

Sec. 406.098. VOLUNTEER EMERGENCY SERVICE MEMBERS AND PERSONNEL.

(a) An emergency service organization which is not a political

subdivision or which is separate from any political subdivision

may elect to obtain workers' compensation insurance coverage for

its named volunteer members who participate in the normal

functions of the organization. A person covered under this

subsection is entitled to full medical benefits and the minimum

compensation payments under the law.

(b) In this section, unless a different meaning is plainly

required by law:

(1) "Emergency service organization" means any organization

established to provide for the general public:

(A) fire prevention and suppression;

(B) hazardous materials response operations; or

(2) "Volunteer members" means individuals who are carried on the

membership list of the organization as active participants and

who receive no remuneration for their services.

(3) "Normal functions" means any response to, participation in,

or departure from an incident scene; training; meetings;

performance of equipment maintenance; or organizational

functions.

(4) "Political subdivision" means a county, municipality,

special district, school district, junior college district,

housing authority, community center for mental health and mental

retardation services established under Subchapter A, Chapter 534,

Health and Safety Code, or any other legally constituted

political subdivision of the state.

the method of calculating premiums for workers' compensation

insurance coverage for volunteer members who are covered pursuant

to this section.

Added by Acts 1995, 74th Leg., ch. 849, Sec. 1, eff. Aug. 28,

1995. Renumbered from Labor Code Sec. 406.097 by Acts 1997, 75th

Leg., ch. 165, Sec. 31.01(63), eff. Sept. 1, 1997.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.037, eff. September 1, 2005.

SUBCHAPTER F. COVERAGE OF CERTAIN INDEPENDENT CONTRACTORS

Sec. 406.121. DEFINITIONS. In this subchapter:

(1) "General contractor" means a person who undertakes to

procure the performance of work or a service, either separately

or through the use of subcontractors. The term includes a

"principal contractor," "original contractor," "prime

contractor," or other analogous term. The term does not include a

motor carrier that provides a transportation service through the

use of an owner operator.

(2) "Independent contractor" means a person who contracts to

perform work or provide a service for the benefit of another and

who ordinarily:

(A) acts as the employer of any employee of the contractor by

paying wages, directing activities, and performing other similar

functions characteristic of an employer-employee relationship;

(B) is free to determine the manner in which the work or service

is performed, including the hours of labor of or method of

payment to any employee;

necessary tools, supplies, or materials to perform the work or

service; and

(D) possesses the skills required for the specific work or

service.

(3) "Motor carrier" means a person who operates a motor vehicle

over a public highway in this state to provide a transportation

service or who contracts to provide that service.

(4) "Owner operator" means a person who provides transportation

services under contract for a motor carrier. An owner operator is

an independent contractor.

(5) "Subcontractor" means a person who contracts with a general

contractor to perform all or part of the work or services that

the general contractor has undertaken to perform.

(6) "Transportation service" means providing a motor vehicle,

with a driver under contract, to transport passengers or

property.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.122. STATUS AS EMPLOYEE. (a) For purposes of workers'

compensation insurance coverage, a person who performs work or

provides a service for a general contractor or motor carrier who

is an employer under this subtitle is an employee of that general

contractor or motor carrier, unless the person is:

(1) operating as an independent contractor; or

(2) hired to perform the work or provide the service as an

employee of a person operating as an independent contractor.

(b) A subcontractor and the subcontractor's employees are not

employees of the general contractor for purposes of this subtitle

if the subcontractor:

(1) is operating as an independent contractor; and

(2) has entered into a written agreement with the general

contractor that evidences a relationship in which the

subcontractor assumes the responsibilities of an employer for the

performance of work.

employees of a motor carrier for the purposes of this subtitle if

the owner operator has entered into a written agreement with the

motor carrier that evidences a relationship in which the owner

operator assumes the responsibilities of an employer for the

performance of work.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.123. ELECTION TO PROVIDE COVERAGE; ADMINISTRATIVE

VIOLATION. (a) A general contractor and a subcontractor may

enter into a written agreement under which the general contractor

provides workers' compensation insurance coverage to the

subcontractor and the employees of the subcontractor.

(b) If a general contractor has workers' compensation insurance

to protect the general contractor's employees and if, in the

course and scope of the general contractor's business, the

general contractor enters into a contract with a subcontractor

who does not have employees, the general contractor shall be

treated as the employer of the subcontractor for the purposes of

this subtitle and may enter into an agreement for the deduction

of premiums paid in accordance with Subsection (d).

written agreement under which the motor carrier provides workers'

compensation insurance coverage to the owner operator and the

employees of the owner operator.

(d) If a general contractor or a motor carrier elects to provide

coverage under Subsection (a) or (c), then, notwithstanding

Section 415.006, the actual premiums, based on payroll, that are

paid or incurred by the general contractor or motor carrier for

the coverage may be deducted from the contract price or other

amount owed to the subcontractor or owner operator by the general

contractor or motor carrier.

(e) An agreement under this section makes the general contractor

the employer of the subcontractor and the subcontractor's

employees only for purposes of the workers' compensation laws of

this state.

(f) A general contractor shall file a copy of an agreement

entered into under this section with the general contractor's

workers' compensation insurance carrier not later than the 10th

day after the date on which the contract is executed. If the

general contractor is a certified self-insurer, the copy must be

filed with the division.

(g) A general contractor who enters into an agreement with a

subcontractor under this section commits an administrative

violation if the contractor fails to file a copy of the agreement

as required by Subsection (f).

(h) Notwithstanding Subsection (b), a person who performs work

or provides a service for an oil or gas well operator and who is

an independent contractor that has no employees shall be treated

in the same manner as an independent contractor with employees

and is not entitled to coverage under the general contractor's

workers' compensation insurance policy unless the independent

contractor and the general contractor enter into an agreement

under this section.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by Acts 1997, 75th Leg., ch. 88, Sec. 1, eff. Sept. 1,

1997.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.038, eff. September 1, 2005.

Sec. 406.124. CAUSE OF ACTION. If a person who has workers'

compensation insurance coverage subcontracts all or part of the

work to be performed by the person to a subcontractor with the

intent to avoid liability as an employer under this subtitle, an

employee of the subcontractor who sustains a compensable injury

in the course and scope of the employment shall be treated as an

employee of the person for purposes of workers' compensation and

shall have a separate right of action against the subcontractor.

The right of action against the subcontractor does not affect the

employee's right to compensation under this subtitle.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.125. RESTRICTION OF UNSAFE WORK PRACTICES UNAFFECTED.

This subchapter does not prevent a general contractor from

directing a subcontractor or the employees of a subcontractor to

stop or change an unsafe work practice.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.126. EXEMPTION. This subchapter does not apply to farm

or ranch employees.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.127. EFFECT OF CERTAIN CONTRACTS OF HIRE. An insurance

company may not demand an insurance premium from an employer for

coverage of an independent contractor or an employee of an

independent contractor if the independent contractor is under a

contract of hire with the employer.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

SUBCHAPTER G. COVERAGE OF CERTAIN BUILDING AND CONSTRUCTION

WORKERS

Sec. 406.141. DEFINITIONS. In this subchapter:

(1) "Hiring contractor" means a general contractor or

subcontractor who, in the course of regular business,

subcontracts all or part of the work to be performed to other

persons.

(2) "Independent contractor" means a person who contracts to

perform work or provide a service for the benefit of another and

who:

(A) is paid by the job and not by the hour or some other

time-measured basis;

(B) is free to hire as many helpers as desired and may determine

the pay of each helper; and

work for other contractors or is free to send helpers to work for

other contractors.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.142. APPLICATION. This subchapter applies only to

contractors and workers preparing to construct, constructing,

altering, repairing, extending, or demolishing:

(1) a residential structure;

(2) a commercial structure that does not exceed three stories in

height or 20,000 square feet in area; or

(3) an appurtenance to a structure described by Subdivision (1)

or (2).

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.143. PROVISION OF WORKERS' COMPENSATION INSURANCE;

INDEPENDENT CONTRACTOR WITHOUT EMPLOYEES. (a) Unless the

independent contractor and hiring contractor enter into an

agreement under Section 406.144, the independent contractor is

responsible for any workers' compensation insurance coverage

provided to an employee of the independent contractor, and the

independent contractor's employees are not entitled to workers'

compensation insurance coverage from the hiring contractor.

(b) An independent contractor without employees shall be treated

in the same manner as an independent contractor with employees

and is not entitled to coverage under the hiring contractor's

workers' compensation insurance policy unless the independent

contractor and hiring contractor enter into an agreement under

Section 406.144.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.144. ELECTION TO PROVIDE COVERAGE; AGREEMENT. (a)

Except as provided by this section, a hiring contractor is not

responsible for providing workers' compensation insurance

coverage for an independent contractor or the independent

contractor's employee, helper, or subcontractor. An independent

contractor and a hiring contractor may enter into a written

agreement under which the independent contractor agrees that the

hiring contractor may withhold the cost of workers' compensation

insurance coverage from the contract price and that, for the

purpose of providing workers' compensation insurance coverage,

the hiring contractor is the employer of the independent

contractor and the independent contractor's employees.

(b) A hiring contractor and independent contractor may enter

into an agreement under Subsection (a) even if the independent

contractor does not have an employee.

division either by personal delivery or by registered or

certified mail and is considered filed on receipt by the

division.

(d) The hiring contractor shall send a copy of an agreement

under this section to the hiring contractor's workers'

compensation insurance carrier on filing of the agreement with

the division.

(e) An agreement under this section makes the hiring contractor

the employer of the independent contractor and the independent

contractor's employees only for the purposes of the workers'

compensation laws of this state.

(f) The deduction of the cost of the workers' compensation

insurance coverage from the independent contractor's contract

price is permitted notwithstanding Section 415.006.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.039, eff. September 1, 2005.

Sec. 406.145. JOINT AGREEMENT. (a) A hiring contractor and an

independent subcontractor may make a joint agreement declaring

that the subcontractor is an independent contractor as defined in

Section 406.141(2) and that the subcontractor is not the employee

of the hiring contractor. If the joint agreement is signed by

both the hiring contractor and the subcontractor and filed with

the division, the subcontractor, as a matter of law, is an

independent contractor and not an employee, and is not entitled

to workers' compensation insurance coverage through the hiring

contractor unless an agreement is entered into under Section

406.144 to provide workers' compensation insurance coverage. The

commissioner shall prescribe forms for the joint agreement.

(b) A joint agreement shall be delivered to the division by

personal delivery or registered or certified mail and is

considered filed on receipt by the division.

signed under this section to the hiring contractor's workers'

compensation insurance carrier on filing of the joint agreement

with the division.

(d) The division shall maintain a system for accepting and

maintaining the joint agreements.

(e) A joint agreement signed under this section applies to each

hiring agreement between the hiring contractor and the

independent contractor until the first anniversary of its filing

date, unless a subsequent hiring agreement expressly states that

the joint agreement does not apply.

(f) If a subsequent hiring agreement is made to which the joint

agreement does not apply, the hiring contractor and independent

contractor shall notify the division and the hiring contractor's

workers' compensation insurance carrier in writing.

(g) If a hiring contractor and an independent contractor have

filed a joint agreement under this section, an insurance company

may not require the payment of an insurance premium by a hiring

contractor for coverage of an independent contractor or an

independent contractor's employee, helper, or subcontractor other

than under an agreement entered into in compliance with Section

406.144.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.040, eff. September 1, 2005.

Sec. 406.146. WRONGFUL INDUCEMENT PROHIBITED. (a) A hiring

contractor may not:

(1) wrongfully induce an employee to enter into a joint

agreement under Section 406.145 stating that the employee is an

independent contractor; or

(2) exert controls over an independent contractor or an employee

of an independent contractor sufficient to make that person an

employee under common-law tests.

(b) A hiring contractor does not exert employer-like controls

over an independent contractor or an independent contractor's

employee solely because of:

(1) controlling the hours of labor, if that control is exercised

only to:

(A) establish the deadline for the completion of the work called

for by the contract;

(B) schedule work to occur in a logical sequence and to avoid

delays or interference with the work of other contractors; or

early morning hours or at other times when the independent

contractor's activities would unreasonably disturb activities in

the neighborhood; or

(2) stopping or directing work solely to prevent or correct an

unsafe work practice or condition or to control work to ensure

that the end product is in compliance with the contracted for

result.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

SUBCHAPTER H. COVERAGE OF FARM AND RANCH EMPLOYEES

Sec. 406.161. DEFINITIONS. In this subchapter:

(1) "Agricultural labor" means the planting, cultivating, or

harvesting of an agricultural or horticultural commodity in its

unmanufactured state.

(2) "Family" means persons related within the third degree by

consanguinity or affinity.

(3) "Labor agent" means a person who:

(A) is a farm labor contractor for purposes of the Migrant and

Seasonal Agricultural Worker Protection Act (29 U.S.C. Section

1801 et seq.); or

(B) otherwise recruits, solicits, hires, employs, furnishes, or

transports migrant or seasonal agricultural workers who work for

the benefit of a third party.

(4) "Migrant worker" means an individual who is:

(A) employed in agricultural labor of a seasonal or temporary

nature; and

(B) required to be absent overnight from the worker's permanent

place of residence.

(5) "Seasonal worker" means an individual who is:

(A) employed in agricultural or ranch labor of a seasonal or

temporary nature; and

(B) not required to be absent overnight from the worker's

permanent place of residence.

(6) "Truck farm" means a farm on which fruits, garden vegetables

for human consumption, potatoes, sugar beets, or vegetable seeds

are produced for market. The term includes a farm primarily

devoted to one of those crops that also has incidental acreage of

other crops.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.162. SCOPE. (a) This subtitle applies to an action to

recover damages for personal injuries or death sustained by a

farm or ranch employee who is:

(1) a migrant worker;

(2) a seasonal worker:

(A) employed on a truck farm, orchard, or vineyard;

(B) employed by a person with a gross annual payroll for the

preceding year in an amount not less than the greater of the

required payroll for the year preceding that year, adjusted for

inflation, or $25,000; or

employs a migrant worker and doing the same work at the same time

and location as the migrant worker; or

(3) an employee, other than a migrant or seasonal worker:

(A) for years before 1991, employed by a person with a gross

annual payroll for the preceding year of at least $50,000; and

(B) for 1991 and subsequent years, employed by a person:

(i) with a gross annual payroll in an amount required for

coverage of seasonal workers under Subdivision (2)(B); or

(ii) who employs three or more farm or ranch employees other

than migrant or seasonal workers.

(b) The comptroller shall prepare a consumer price index for

this state and shall certify the applicable index factor to the

division before October 1 of each year. The division shall

adjust the gross annual payroll requirement under Subsection

(a)(2)(B) accordingly.

of a person includes any amount paid by the person to a labor

agent for the agent's services and for the services of migrant or

seasonal workers but does not include wages paid to:

(1) the person or a member of the person's family, if the person

is a sole proprietor;

(2) a partner in a partnership or a member of the partner's

family; or

(3) a shareholder of a corporation in which all shareholders are

family members or a member of the shareholder's family.

(d) This subchapter does not affect the application or

interpretation of this subtitle as it relates to persons engaged

in activities determined before January 1, 1985, not to be farm

or ranch labor.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Amended by:

Acts 2005, 79th Leg., Ch.

265, Sec. 3.041, eff. September 1, 2005.

Sec. 406.163. LIABILITY OF LABOR AGENT; JOINT AND SEVERAL

LIABILITY. (a) A labor agent who furnishes a migrant or

seasonal worker is liable under this subtitle as if the labor

agent were the employer of the worker, without regard to the

right of control or other factors used to determine an

employer-employee relationship.

(b) If the labor agent does not have workers' compensation

insurance coverage, the person with whom the labor agent

contracts for the services of the migrant or seasonal worker is

jointly and severally liable with the labor agent in an action to

recover damages for personal injuries or death suffered by the

migrant or seasonal worker as provided by this subtitle, and, for

that purpose, the migrant or seasonal worker is considered the

employee of the person with whom the labor agent contracts and

that person may obtain workers' compensation insurance coverage

for that worker as provided by this subtitle. If a migrant or

seasonal worker is covered by workers' compensation insurance

coverage, the person with whom the labor agent contracts is not

liable in a separate action for injury or death except to the

extent provided by this subtitle.

contracts of whether the agent has workers' compensation

insurance coverage. If the agent does have workers' compensation

insurance coverage, the agent shall present evidence of the

coverage to each person with whom the agent contracts.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.164. ELECTIVE COVERAGE OF EMPLOYER AND FAMILY MEMBERS.

(a) A person who purchases a workers' compensation insurance

policy covering farm or ranch employees may cover the person, a

partner, a corporate officer, or a family member in that policy.

The insurance policy must specifically name the individual to be

covered.

(b) The elective coverage continues while the policy is in

effect and the named individual is endorsed on the policy.

under the policy unless an election for that coverage is made

under this section.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

Sec. 406.165. NOT APPLICABLE TO INDEPENDENT CONTRACTORS. (a) A

farm or ranch employee who performs work or provides a service

for a farm or ranch employer subject to this subchapter is an

employee of that employer unless the employee is hired to perform

the work or provide the service as an employee of an independent

contractor.

(b) In this section, "independent contractor" means a person,

other than a labor agent, who contracts with a farm or ranch

employer to perform work or provide a service for the benefit of

the employer and who ordinarily:

(1) acts as the employer of the employee by paying wages,

directing activities, and performing other similar functions

characteristic of an employer-employee relationship;

(2) is free to determine the manner in which the work or service

is performed, including the hours of labor or the method of

payment;

(3) is required to furnish necessary tools, supplies, or

materials to perform the work or service; and

(4) possesses skills required for the specific work or service.

Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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