Does a Texas city, county, or other local government have to carry workers' compensation insurance for its employees?

Plain-English summary

The Executive Director of the Texas Workers' Compensation Commission asked the Attorney General whether a local government (a "political subdivision," meaning a city, county, school district, or similar entity) is required to carry workers' compensation coverage for its employees. The complication was that an old 1974 opinion (H-338) had read the statutes then in force to make coverage optional for local governments. But the workers' compensation laws were substantially rewritten in 1989, and the question was whether that changed the answer.

The Attorney General concluded that coverage is now mandatory. Section 2(a) of article 8309h says every political subdivision "shall" do one of three things: become a self-insurer, buy a workers' compensation insurance policy, or enter an interlocal agreement with other subdivisions for self-insurance. An El Paso court of appeals had already read that provision the same way in Wallace v. City of Midland, holding that a subdivision has some discretion in how it provides coverage but no discretion to leave its employees uncovered. The opinion agreed and said no further authority was needed.

The opinion explained why the 1974 opinion had come out differently. The actual language of section 2(a) had not changed, but other provisions H-338 relied on had. The older law incorporated rules letting employees of an employer without coverage sue at common law for on-the-job injuries (with the employer's usual defenses limited), and H-338 read that to imply a subdivision could choose to go without coverage and face those suits. The 1989 amendments removed that incorporation, and a new provision (article 8308-3.23(a)) allowed employers to elect coverage "except for public employees." So the option to go bare no longer existed for local governments.

The opinion also answered a question about self-insurance. If a subdivision self-insures, is it subject to the same self-insurance regulation that applies to private employers? The answer was no for the specific regulatory regime: section 3(a)(3) of article 8309h does not adopt the self-insurance regulation provisions in chapter D of the general law (article 8308), which cover certification, reporting, taxes, and fees. But a self-insuring subdivision still has to comply with the other adopted provisions of the general compensation law (the coverage and benefits rules), except where those are inconsistent with article 8309h. The opinion declined to list every provision a subdivision would need to consider, saying that is work for the subdivision and its lawyers.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The workers' compensation statutes cited here were former civil-statute articles (article 8309h and article 8308, V.T.C.S.); the workers' compensation law was later recodified into the Labor Code, so these article numbers no longer match current law. Confirm the current Labor Code provisions before relying on anything described here.

Background and statutory framework

The first question was whether the current workers' compensation laws require a political subdivision to provide coverage for its employees. The requester noted that Attorney General Opinion H-338 (1974) had read the then-current statutes to permit political subdivisions to forego coverage, but argued that under the laws as substantially rewritten in 1989 (Acts 1989, 71st Leg., 2d C.S., ch. 1), coverage was mandatory. The Attorney General agreed.

Article 8309h, V.T.C.S., section 2(a), provided: "All political subdivisions of this state shall become either self-insurers, provide insurance under workmen's compensation insurance contracts or policies, or enter into interlocal agreements with other political subdivisions providing for self-insurance, extending workmen's compensation benefits to their employees." The court in Wallace v. City of Midland, 836 S.W.2d 641 (Tex. App.—El Paso 1992, writ denied), construed that to require a political subdivision "to provide workers' compensation coverage in any one of three ways" set out in the statute, adding that "[t]hough it had some discretion in how it would fulfill the workers' compensation requirement, . . . it did not have the discretion not to cover its employees in one way or another." The opinion concluded no further authority was necessary to find a subdivision's provision of coverage mandatory.

The opinion addressed why H-338 had reached the opposite conclusion. Although the quoted section 2(a) language had not changed, other provisions on which H-338 relied had. Primarily, former section 3(a) of article 8309h had specifically adopted other provisions of the workers' compensation laws that governed the rights of employees whose employers lacked coverage to seek common-law relief for on-the-job injuries and that limited the common-law defenses available to such employers (see V.T.C.S. arts. 8308-3.03, 3.04, formerly codified as V.T.C.S. art. 8306, §§ 1-4). H-338 took the incorporation of those provisions into article 8309h to indicate that political subdivisions might elect not to have coverage and thus be subject to the common-law suits. Article 8309h was amended in 1989 so that it no longer incorporates such provisions for common-law suits (Acts 1989, 71st Leg., 2d C.S., ch. 1, § 15.47), and new article 8308-3.23(a), added in the 1989 revision, provided that employers, "except for public employees and as otherwise provided by law," "may elect to obtain workers' compensation insurance coverage" (emphasis the opinion's). The second question was predicated on a negative answer to the first, so the opinion did not reach it.

On the third question, whether a subdivision that elects to self-insure is subject to requirements similar to those applied to private employers in article 8308-3.51 to 3.70, the opinion concluded that section 3(a)(3) of article 8309h specifically indicates that article does not adopt the self-insurance regulation provisions in article 8308, chapter D. Chapter D provides for a division of self-insurance regulation within the Workers' Compensation Commission, certification of self-insurers, reporting requirements, and taxes and fees. From the specific exclusion of those provisions, the opinion concluded the legislature did not intend self-insuring political subdivisions to be subject to the generally applicable self-insurance regulation of article 8308, subchapter D. However, in providing coverage through self-insurance, subdivisions would be subject to the other provisions of the general compensation law adopted by section 3(a)(3) "except to the extent that they are inconsistent with th[e] article." The opinion noted that a subdivision's self-insurance plan must generally comply with article 8308, except certain article 2 provisions on financing the Commission, the chapters B, C, and D provisions on "security procedures," "commercial insurance," and "self-insurance regulation," and the section 4.01 exemplary-damages provisions; so, for example, the plan must generally comply with the coverage and benefits provisions of articles 3 and 4 of article 8308. The opinion declined to itemize every provision a subdivision should account for in structuring a self-insurance plan, saying such matters should be worked out by consultation between the subdivision and its counsel.

Common questions

Does a Texas city or county have to carry workers' comp for its employees?
The opinion concluded yes. Under article 8309h, section 2(a), as the law stood after the 1989 rewrite, a political subdivision must provide workers' compensation coverage, choosing among self-insurance, an insurance policy, or an interlocal self-insurance agreement.

Didn't an older AG opinion say it was optional?
Yes. Attorney General Opinion H-338 (1974) had read the earlier statutes to allow subdivisions to go without coverage. The opinion explained that the provisions H-338 relied on (which incorporated common-law-suit rules for uncovered employers) were removed in the 1989 amendments, and a new provision allowed elective coverage "except for public employees," so the optional reading no longer held.

Can a local government self-insure instead of buying a policy?
Yes. Section 2(a) lists self-insurance as one of the three permitted ways to provide coverage, including through an interlocal agreement with other subdivisions.

If a subdivision self-insures, is it regulated like a private self-insurer?
The opinion concluded it is not subject to the general self-insurance regulation in article 8308, chapter D (certification, reporting, taxes, fees), because section 3(a)(3) of article 8309h does not adopt those provisions. It must still comply with the other adopted provisions of the general compensation law, such as coverage and benefits rules, except where they are inconsistent with article 8309h.

Citations

• Article 8309h, V.T.C.S., § 2(a) (three ways to provide coverage); § 3(a), § 3(a)(3) (provisions adopted/not adopted)
• Article 8308, V.T.C.S. (general workers' compensation law), chapters B, C, D; articles 3 and 4; § 4.01
• V.T.C.S. art. 8308-3.03, 3.04 (formerly V.T.C.S. art. 8306, §§ 1-4); art. 8308-3.23(a); art. 8308-3.51 to 3.70
• Acts 1989, 71st Leg., 2d C.S., ch. 1, § 15.47
• Wallace v. City of Midland, 836 S.W.2d 641 (Tex. App.—El Paso 1992, writ denied)
• Attorney General Opinion H-338 (1974)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0180
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1992/dm0180.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the garbled case name was verified against the official reporter. The linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

November 13, 1992

Mr. Todd K. Brown
Executive Director
Texas Workers' Compensation Commission
4000 South I-H-35
Austin, Texas 78704

Opinion No. DM-180

Re: Whether a political subdivision is required to provide workers' compensation coverage for its employees, and related questions (RQ-401)

Dear Mr. Brown:

You ask first whether a political subdivision is required by the current workers' compensation laws to provide workers' compensation coverage for its employees. You note that Attorney General Opinion H-338 (1974) construed the provisions of the workers' compensation laws in effect at the time of that opinion's issuance to permit political subdivisions to elect to forego providing workers' compensation coverage for their employees, but argue that under the current workers' compensation laws, which were substantially rewritten in 1989, political subdivisions' provision of such coverage is mandatory. See Acts 1989, 71st Leg., 2d C.S., ch. 1, at 1. We agree.

Article 8309h, V.T.C.S., relating to workers' compensation insurance for employees of political subdivisions, provides in section 2(a):

All political subdivisions of this state shall become either self-insurers, provide insurance under workmen's compensation insurance contracts or policies, or enter into interlocal agreements with other political subdivisions providing for self-insurance, extending workmen's compensation benefits to their employees.

The court in Wallace v. City of Midland, 836 S.W.2d 641 (Tex. App.—El Paso 1992, writ denied), construed these provisions to require a political subdivision "to provide workers' compensation coverage in any one of three ways" set out therein. "Though it had some discretion in how it would fulfill the workers' compensation requirement," the court continued, "it did not have the discretion not to cover its employees in one way or another." We think no further authority is necessary for us to conclude, in response to your first question, that a political subdivision's provision of workers' compensation coverage to its employees is mandatory.

We would note, however, with reference to the conclusion of Attorney General Opinion H-338 that political subdivisions were not required to provide workers' compensation coverage, that although the quoted provisions of article 8309h, section 2(a), have not changed since that opinion's issuance, other provisions on which that opinion relied to reach its conclusion have changed. Primarily, section 3(a) of article 8309h formerly specifically adopted other provisions of the workers' compensation laws governing the rights of employees whose employers did not have workers' compensation coverage to seek relief at common law for injuries sustained on-the-job, and limiting the common-law defense available to such employers in those actions. See V.T.C.S. arts. 8308-3.03, 3.04 (formerly codified as V.T.C.S. art. 8306, §§ 1-4). Attorney General Opinion H-338 took the incorporation of these provisions into those of article 8309h to indicate that political subdivisions might elect not to have workers' compensation coverage and thus to be subject to the suits at common law provided for in the incorporated provisions. Article 8309h was amended in 1989 so that it no longer incorporates such provisions for common-law suits. Acts 1989, 71st Leg., 2d C.S., ch. 1, § 15.47, at 114; see also V.T.C.S. art. 8308-3.23(a), added in 1989 revision, providing that employers, "except for public employees and as otherwise provided by law," "may elect to obtain workers' compensation insurance coverage." (Emphasis added.)

Your next question is predicated on a negative response to your first question. We thus need not address it.

Your third question is:

If a political subdivision elects to become a self-insurer, is it subject to any requirements similar to those applied to private employers in Art. 8308-3.51 to 3.70?

Section 3(a)(3) of article 8309h specifically indicates that article does not adopt the provisions on self-insurance regulation contained in article 3, chapter D, of the general workers' compensation law, article 8308. Article 8308, chapter D, provides for a division of self-insurance regulation within the Workers' Compensation Commission, certification of self-insurers, reporting requirements, taxes and fees. We can only conclude from the specific exclusion of these provisions from those adopted by section 3(a)(3) of article 8309h that the legislature did not intend that political subdivisions which elect to meet the article 8309h, section 2(a), coverage requirement by self-insuring, be subject to the generally applicable self-insurance regulation provisions of article 8308, subchapter D.

However, in providing coverage through self-insurance, political subdivisions would be subject to the other provisions of the general compensation laws which are adopted by section 3(a)(3) of article 8309h "except to the extent that they are inconsistent with th[e] article." The adoption provisions of section 3(a)(3) indicate that, generally speaking, a political subdivision's self-insurance plan must comport with all of the provisions of the general compensation law, article 8308, except certain article 2 provisions relating to the financing of the Workers' Compensation Commission, the provisions of article 3, chapters B, C, and D, respectively, relating to "security procedures," "commercial insurance," and "self-insurance regulation," and the section 4.01 provisions regarding exemplary damages. Thus, for example, a political subdivision's self-insurance plan must, generally speaking, comply with the coverage and benefits provisions of articles 3 and 4 of article 8308. We do not think it appropriate in the opinion process, however, to attempt to itemize and discuss every provision of the general compensation law, or of other law, which a political subdivision should take account of in structuring a self-insurance plan. Nor can we anticipate situations where such provisions might or might not be relevant. Such matters should be worked out by consultation between a political subdivision and its counsel.

SUMMARY

Political subdivisions of the state are required to provide workers' compensation coverage for their employees.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by William Walker
Assistant Attorney General