Key points
- Texas is unusual: most private employers may choose not to carry workers’ compensation, but the choice has real consequences.
- Many general contractors and commercial customers require it, and public building or construction projects generally do.
- Payroll classification and your experience modifier strongly influence what you pay.
Plumbing is physical work. Technicians lift water heaters, work in crawl spaces and attics, use cutting and soldering tools, and drive all day. Workers’ compensation provides medical care and income benefits to employees injured on the job, and in exchange generally limits the employee’s ability to sue the employer.
Texas and the nonsubscriber choice
Unlike nearly every other state, Texas generally allows private employers to decide whether to carry workers’ compensation. Employers without it are called nonsubscribers. The choice is not free:
- Nonsubscribers generally lose important legal defenses if an injured employee sues for negligence.
- Nonsubscribers have notice and reporting obligations to the state and to employees.
- Many general contractors and commercial customers require subcontractors to carry workers’ compensation.
- Contractors on public building or construction projects are generally required to provide coverage for employees on the project.
For most established plumbing companies with employees and commercial work, carrying workers’ compensation is the practical choice. Confirm current requirements with the Texas Department of Insurance, Division of Workers’ Compensation.
How it’s priced
Workers’ compensation is generally rated on payroll by classification. Plumbing work has its own classifications, and office and sales staff are usually rated separately. Getting the classification right matters: misclassified payroll can lead to overcharges or audit surprises.
Audits. After the policy period, the insurance company typically audits actual payroll. If your company grew, expect an additional premium. Keep payroll records organized by job type, and collect certificates from any subcontractors — uninsured subcontractors may be added to your payroll at audit.
Experience modification. As a company grows, its own claim history begins to affect pricing through an experience modifier. A lower modifier helps on price and can matter when bidding commercial work.
Reducing claims
Lifting technique and equipment, ladder and trench safety, eye protection for cutting and soldering, vehicle safety, and a return-to-work program all reduce the frequency and cost of claims over time.
Common questions
Do I need workers’ comp if all my plumbers are subcontractors?
It depends on whether they are truly independent contractors and what your contracts require. Insurance companies and auditors look at the actual working relationship. Uninsured subcontractors can be treated as your employees for premium purposes at audit.
Does workers’ comp cover the owner?
Owners can often choose whether to include themselves, depending on the business structure and the policy. It’s a decision worth making deliberately.
Can workers’ comp and general liability both apply to an employee injury?
Employee injuries are generally excluded from general liability. Workers’ compensation, including its employer’s liability section, is the policy designed for them.