How Employers May Respond to Increased Costs for Workers’ Comp Insurance
According to data collected by the Bureau of Labor Statistics, a division of the U.S. Department of Labor, the average cost of workers’ compensation in the Dallas-Fort Worth area rose by 3.6 percent in 2024.
What is the potential impact of the increased workers’ compensation expense on employees in the DFW Metroplex? What actions will employers potentially take in response to the elevated costs?
The Texas Workers’ Compensation System
Like all other states, Texas provides benefits to injured workers through its workers’ compensation system. Unlike any other state, however, Texas does not mandate that employers subscribe to the state’s workers’ comp program. Non-subscribers, though, may be sued in civil court for injuries suffered by employees, and they must either obtain some other type of insurance to cover potential losses or pay any damages directly.
The vast majority of companies in Texas do subscribe to the state workers’ compensation system, purchasing workers’ compensation insurance to cover potential claims. The cost of workers’ compensation insurance varies, based on a number of factors, including:
- The type of business and the injury risks involved in that business
- The number of claims that have been filed under the company’s workers’ compensation policy
- The total payroll at the company
- The specific job classifications of each employee
What Are the Potential Responses of Employers to a Rise in Workers’ Compensation Costs?
An increase in workers’ compensation costs directly reduces profits, so companies can be expected to take measures to reduce expenses elsewhere:
- In an effort to minimize the number of claims filed, companies may implement greater safety precautions. That may involve new safety measures, more safety training, and increased workplace sanctions for failing to comply with safety protocols.
- To keep payroll in check, companies might keep hiring at a minimum, limit promotions, minimize pay increases, and eliminate overtime work. Companies may also choose to downsize or outsource some jobs to independent contractors.
- Increased workers’ compensation costs may provide companies with incentives to reduce or discontinue certain employee benefits, from health insurance to retirement benefits.
- Ultimately, a company may decide to close a shop or discontinue business operations if expenses are too high.
At the law offices of Bailey & Galyen, we have protected the rights of injured workers in Texas for more than four decades. We have a comprehensive understanding of the Texas workers’ compensation system and can help you take the right steps to maximize your chances of obtaining workers’ comp benefits after a workplace injury.
To learn more about how we can help protect your rights when you’ve been hurt on the job in the Dallas-Fort Worth Metroplex, or anywhere in Texas, contact us by email or call our offices. Our phones are answered 24 hours a day, seven days a week.
