A Texas workers comp exemption lets certain business owners legally go without workers’ compensation coverage on themselves — Two separate rules apply. (1) Any private employer may choose not to carry coverage at all (§406.002). It must then file the annual non-subscriber notice. (2) If a business does carry coverage, its sole proprietors and partners are covered by default but may be left off the policy by an endorsement.
A corporate executive officer may be left off only if they own at least 25 percent of the business (§406.097). No limit on the number of officers was found. — while the law still requires coverage for employees once a business has NONE. Texas is the only state where workers’ comp is optional for most private employers, whatever their size.
Under Texas Labor Code §406.002, a private employer may choose whether to carry coverage, so no employee count triggers a requirement. Public employers must have coverage. Contractors on a building or construction contract with a Texas governmental entity must also have it (§406.096). An employer that opts out is called a “non-subscriber.” or more.
This guide explains who qualifies for the Texas workers comp exemption, the exact form, where to file it, what it costs, and what an exempt owner gives up. Verified against Texas sources as of October 2026.
Texas at a Glance
| Coverage required at | NONE. Texas is the only state where workers’ comp is optional for most private employers, whatever their size. Under Texas Labor Code §406.002, a private employer may choose whether to carry coverage, so no employee count triggers a requirement. Public employers must have coverage. Contractors on a building or construction contract with a Texas governmental entity must also have it (§406.096). An employer that opts out is called a “non-subscriber.” employee(s) |
| Who may elect out | Two separate rules apply. (1) Any private employer may choose not to carry coverage at all (§406.002). It must then file the annual non-subscriber notice. (2) If a business does carry coverage, its sole proprietors and partners are covered by default but may be left off the policy by an endorsement. A corporate executive officer may be left off only if they own at least 25 percent of the business (§406.097). No limit on the number of officers was found. |
| Exemption form | DWC Form-005, “Employer Notice of No Coverage or Termination of Coverage.” This is the non-subscriber notice a private employer files when it chooses not to carry coverage or ends its coverage. An owner or officer who is excluded from a policy that is in force does not file a state form. That exclusion is made by an endorsement to the insurance policy (§406.097). |
| Filed with | Texas Department of Insurance, Division of Workers’ Compensation (TDI-DWC). File online through Employer E-File (https://www.tdi.texas.gov/wc/nonsubscriber.html) or on the paper form (https://www.tdi.texas.gov/forms/dwc/dwc005nocovst.pdf). The filing window is February 1 to April 30 every year. Questions: [email protected]. Officer and owner exclusions are filed with the insurance carrier as a policy endorsement. |
| Filing fee | $0 (TDI’s filing pages list no fee, but I did not find an explicit statement that filing is free. Confirm with TDI-DWC.) |
| Renewal | The non-subscriber notice (DWC Form-005) does not carry over. A non-subscriber must file it every year between February 1 and April 30. An officer or owner exclusion lasts as long as the policy endorsement does and should be checked at each policy renewal. |
| Penalty for being uninsured | A private Texas employer is not penalized just for not carrying coverage, because coverage is optional. These failures are administrative violations: not filing the non-subscriber notice (§406.004) and not giving employees the required coverage notices (§406.005). Under §415.021, administrative penalties can reach 25000 per day per occurrence, and each day counts as a separate violation. Contractors on governmental building or construction projects must have coverage (§406.096). |
In This Texas Guide:
Who Qualifies for A Texas Workers Comp Exemption
Two separate rules apply. (1) Any private employer may choose not to carry coverage at all (§406.002). It must then file the annual non-subscriber notice. (2) If a business does carry coverage, its sole proprietors and partners are covered by default but may be left off the policy by an endorsement.
A corporate executive officer may be left off only if they own at least 25 percent of the business (§406.097). No limit on the number of officers was found.
Texas Labor Code §406.097. A sole proprietor, partner or corporate executive officer of a business that carries coverage gets benefits as an employee unless an endorsement to the policy (or to the certificate of authority to self-insure) specifically excludes them. A corporate officer can be excluded only if they own at least 25 percent of the business.
For an officer at or above 25 percent, the “dual capacity doctrine” does not apply and does not cancel the exclusion.
How to File the Texas Workers Comp Exemption
The form is DWC Form-005, “Employer Notice of No Coverage or Termination of Coverage.” This is the non-subscriber notice a private employer files when it chooses not to carry coverage or ends its coverage. An owner or officer who is excluded from a policy that is in force does not file a state form. That exclusion is made by an endorsement to the insurance policy (§406.097)..
It is filed with Texas Department of Insurance, Division of Workers’ Compensation (TDI-DWC). File online through Employer E-File (https://www.tdi.texas.gov/wc/nonsubscriber.html) or on the paper form (https://www.tdi.texas.gov/forms/dwc/dwc005nocovst.pdf). The filing window is February 1 to April 30 every year. Questions: [email protected]. Officer and owner exclusions are filed with the insurance carrier as a policy endorsement..
The fee is $0 (TDI’s filing pages list no fee, but I did not find an explicit statement that filing is free. Confirm with TDI-DWC.). Renewal: The non-subscriber notice (DWC Form-005) does not carry over. A non-subscriber must file it every year between February 1 and April 30. An officer or owner exclusion lasts as long as the policy endorsement does and should be checked at each policy renewal..
Filing on the state’s own site costs nothing beyond any statutory fee — the “exemption filing services” that advertise on this search charge for the same form.
Texas Workers Comp Exemption Rules at a Glance
The exact Texas workers comp exemption rules every owner should check before deciding to go without coverage:
| Employee threshold | NONE. Texas is the only state where workers’ comp is optional for most private employers, whatever their size. Under Texas Labor Code §406.002, a private employer may choose whether to carry coverage, so no employee count triggers a requirement. Public employers must have coverage. Contractors on a building or construction contract with a Texas governmental entity must also have it (§406.096). An employer that opts out is called a “non-subscriber.” |
| Who may elect out | Two separate rules apply. (1) Any private employer may choose not to carry coverage at all (§406.002). It must then file the annual non-subscriber notice. (2) If a business does carry coverage, its sole proprietors and partners are covered by default but may be left off the policy by an endorsement. A corporate executive officer may be left off only if they own at least 25 percent of the business (§406.097). No limit on the number of officers was found. |
| Corporate officers | Texas Labor Code §406.097. A sole proprietor, partner or corporate executive officer of a business that carries coverage gets benefits as an employee unless an endorsement to the policy (or to the certificate of authority to self-insure) specifically excludes them. A corporate officer can be excluded only if they own at least 25 percent of the business. For an officer at or above 25 percent, the “dual capacity doctrine” does not apply and does not cancel the exclusion. |
| Workers exempt by law | These workers are outside Texas coverage unless the employer chooses to cover them (§406.091). Domestic workers. Casual workers whose work is incidental to a personal residence. Farm and ranch workers, except as Subchapter H says (§406.161 and following). Under Subchapter H, coverage does apply to migrant workers and to seasonal workers on a truck farm, orchard or vineyard. It also applies to farm and ranch workers whose employer met the yearly inflation-adjusted payroll level in the prior year (2026 level: 73163, base 25000) or employs 3 or more farm or ranch workers who are not migrant or seasonal. Real estate licensees paid only by commission are not covered unless the employer elects coverage and names them on the policy (§406.094). Independent contractors are not employees (§406.121 and §406.141). For building and construction work, a hiring contractor and an independent contractor can confirm the relationship on DWC Form-083 or DWC Form-085. |
| Form | DWC Form-005, “Employer Notice of No Coverage or Termination of Coverage.” This is the non-subscriber notice a private employer files when it chooses not to carry coverage or ends its coverage. An owner or officer who is excluded from a policy that is in force does not file a state form. That exclusion is made by an endorsement to the insurance policy (§406.097). |
| Where to file | Texas Department of Insurance, Division of Workers’ Compensation (TDI-DWC). File online through Employer E-File (https://www.tdi.texas.gov/wc/nonsubscriber.html) or on the paper form (https://www.tdi.texas.gov/forms/dwc/dwc005nocovst.pdf). The filing window is February 1 to April 30 every year. Questions: [email protected]. Officer and owner exclusions are filed with the insurance carrier as a policy endorsement. |
| Fee | $0 (TDI’s filing pages list no fee, but I did not find an explicit statement that filing is free. Confirm with TDI-DWC.) |
| Renewal | The non-subscriber notice (DWC Form-005) does not carry over. A non-subscriber must file it every year between February 1 and April 30. An officer or owner exclusion lasts as long as the policy endorsement does and should be checked at each policy renewal. |
| Proof of exemption or coverage | A covered employer gives a certificate of insurance. On governmental construction projects, written certification of coverage is required, and each subcontractor gives it to the general contractor, who passes it to the governmental entity (§406.096). Anyone can check coverage with TDI’s TXCOMP “Locate Covered Employer” search (https://www.tdi.texas.gov/wc/employer/coverage.html) or by emailing [email protected]. A non-subscriber can show its filed DWC Form-005. For construction independent-contractor relationships, DWC Form-083 or DWC Form-085 is used. |
What A Texas Workers Comp Exemption Gives Up
An excluded owner or officer gets no workers’ comp income or medical benefits from the policy if injured on the job. A non-subscriber employer gives up the exclusive-remedy protection, so injured employees may sue it for negligence. In that lawsuit, §406.033 bars the employer from using three defenses: that the employee was also negligent, that the employee accepted the risk, or that a coworker was negligent.
The employee must still prove the employer’s negligence caused the injury. The employer keeps limited defenses, such as the employee intending the injury or being intoxicated. Confirm with your state board and a licensed attorney.
One honest paragraph on the “ghost policy”: a minimum-premium policy with no employees sold to owners who need a certificate of insurance. It is legal in many states, but it is not a Texas workers comp exemption — it is coverage with nobody on it. If you add a worker, it must be reported, or the audit will find them.
Workers Exempt by Law in Texas
These workers are outside Texas coverage unless the employer chooses to cover them (§406.091). Domestic workers. Casual workers whose work is incidental to a personal residence. Farm and ranch workers, except as Subchapter H says (§406.161 and following). Under Subchapter H, coverage does apply to migrant workers and to seasonal workers on a truck farm, orchard or vineyard.
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It also applies to farm and ranch workers whose employer met the yearly inflation-adjusted payroll level in the prior year (2026 level: 73163, base 25000) or employs 3 or more farm or ranch workers who are not migrant or seasonal. Real estate licensees paid only by commission are not covered unless the employer elects coverage and names them on the policy (§406.094). Independent contractors are not employees (§406.121 and §406.141).
For building and construction work, a hiring contractor and an independent contractor can confirm the relationship on DWC Form-083 or DWC Form-085.
Proving A Texas Workers Comp Exemption or Coverage
A covered employer gives a certificate of insurance. On governmental construction projects, written certification of coverage is required, and each subcontractor gives it to the general contractor, who passes it to the governmental entity (§406.096). Anyone can check coverage with TDI’s TXCOMP “Locate Covered Employer” search (https://www.tdi.texas.gov/wc/employer/coverage.html) or by emailing [email protected]. A non-subscriber can show its filed DWC Form-005. For construction independent-contractor relationships, DWC Form-083 or DWC Form-085 is used.
Why the Texas Workers Comp Exemption Matters
The Texas workers comp exemption is a trade: lower cost today against no safety net if you are hurt. The second half of the trade is the one the search results never lead with. Texas is the only state where most private employers may opt out of workers’ comp entirely.
Non-subscribers must: (1) file DWC Form-005 every year between February 1 and April 30; (2) tell each new employee at hiring whether there is coverage; (3) post a coverage notice at the workplace; and (4) notify employees within 15 days when coverage is obtained, ended or canceled (§406.005). Owners and officers of a business that does carry coverage are covered by default unless excluded by endorsement.
Confirm current rules with TDI-DWC and a licensed attorney. If the Texas workers comp exemption rules above leave any doubt about whether a worker counts, ask the state agency before you decide — the answer is free, and the penalty for guessing wrong is not.
Employer side: the Texas requirements guide covers the threshold, who counts and the penalties in full. Hurt while exempt? You may still have a claim against a third party — a licensed attorney can say.
Frequently Asked Questions
Who can file a workers comp exemption in Texas?
Two separate rules apply. (1) Any private employer may choose not to carry coverage at all (§406.002). It must then file the annual non-subscriber notice. (2) If a business does carry coverage, its sole proprietors and partners are covered by default but may be left off the policy by an endorsement.
A corporate executive officer may be left off only if they own at least 25 percent of the business (§406.097). No limit on the number of officers was found.
What form is the Texas workers comp exemption?
DWC Form-005, “Employer Notice of No Coverage or Termination of Coverage.” This is the non-subscriber notice a private employer files when it chooses not to carry coverage or ends its coverage. An owner or officer who is excluded from a policy that is in force does not file a state form. That exclusion is made by an endorsement to the insurance policy (§406.097)..
File it on the state’s own site; filing services charge for the same form.
Can an exempt owner in Texas still collect benefits if hurt?
No. An exemption removes the owner from coverage, so there is no claim for medical care or lost wages. That is the trade.
Official Texas Sources & Resources
- Texas Texas Department of Insurance, Division of Workers’ Compensation (TDI-DWC): https://www.tdi.texas.gov/wc/
- Texas Workers’ Comp Statute: https://statutes.capitol.texas.gov/Docs/LA/htm/LA.406.htm
- U.S. Department of Labor — Workers’ Comp: dol.gov
- Insurance Information Institute: iii.org
This Texas workers comp exemption guide was last verified against official Texas sources in October 2026. Rules change — confirm the current figure with the state agency or a licensed attorney.
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Disclaimer: This guide is informational only and is not legal, medical, or financial advice. Workers Comp Explained is an independent educational resource, not a law firm or insurer. Workers’ comp benefits, settlement values, deadlines, and requirements vary by state and by the specific facts of your injury and change over time, and any settlement figures here are illustrative only.
Confirm your rights and any deadline with your state’s workers’ compensation board and a licensed attorney before you act.