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Open-Ended Liability: When Employers Do Not Have Workers' Compensation Insurance

By Leslie Zieren, The McCalmon Group, Inc.

A former Galveston, Texas, restaurant dishwasher was injured on the job when a glass shattered in his hand when he was emptying a dishwasher. Shortly thereafter, he was terminated. He sued his former employer for negligence and wrongful termination, alleging the employer failed to provide gloves for use to prevent such injuries and then terminated him because he sustained an injury.

The plaintiff seeks trial by jury and monetary damages up to a million dollars. Philip Gonzales "Dishwasher alleges Olympia at Pier 21 wrongfully terminated him" (Dec. 26, 2017).


Texas doesn’t require most private employers to have workers’ compensation insurance, so when an employee like this one is injured on the job, potential money damages can be significant.

Employers in states, like Texas, that allow them to choose not to have workers’ compensation insurance are referred to as “nonsubscribers.” They must file an annual notice with the Texas Department of Insurance; post notices of their status in the workplace, and tell new employees they don’t have worker’s compensation coverage.

If an employee is injured or becomes ill on the job, nonsubscribers in Texas are precluded from arguing in court that: the injured employee’s negligence caused the injury; another employee’s negligence caused the injury; or that the injured employee knew about the danger and voluntarily accepted it. These limitations are supposed to serve as an incentive to employers to carry worker’s compensation coverage, but, as the above case illustrates, not every employer makes the wise decision.

Workers’ compensation coverage precludes negligence lawsuits and instead provides medical treatment, rehabilitation, and wage replacement for injured employees. Without that coverage, for a severe injury, an employer could be liable, if found negligent, for hundreds of thousands of dollars in medical-related bills, including pain and suffering damages, punitive damages, and attorney fees.

Terminating an employee for sustaining an injury is a wrongful termination risk, whether or not an employer has workers’ compensation coverage. The additional damages from this claim include lost wages and benefits.

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