Hundreds of Thousands of Texans Without Workplace Insurance

At least a half-million Texas workers have no occupational insurance coverage, either from a state-approved workers' compensation plan or from a private equivalent, state insurance officials said Tuesday.

The figures, provided by the Texas Department of Insurance, provoked impassioned debate at a legislative hearing about policy solutions in the only state in the country where the decision to carry workers' compensation insurance or a private equivalent is voluntary for companies of any size.

The Texas House Committee on Business and Industry is studying the voluntary workers' compensation system, the shifting of costs to taxpayers and proposals for improving care for workers — or their families — who are left with few or no benefits after a workplace injury or death.

“That’s a lot of Texans out there without any protection, without any help, having to resort to public assistance and all the rest of us supporting them instead of these bad actors,” state Rep. René Oliveira, D-Brownsville, chairman of the committee, said in an interview after the hearing. “I think we have to look at this as fraud, as a punishment to honorable businesses that are being outbid.”

During the hearing, Oliveira said employers who have no coverage often engage in “patient dumping” and stick taxpayers with the bill. Those with private insurance also absorb the shifted costs through higher premiums.

“They just drop them off at the emergency room and say goodbye,” Oliveira said.

Though people who suffer workplace accidents can sue employers who have no workers' compensation insurance, in many cases there is no one to sue and no money to recover. An Austin man, Cristian Hurtado, told the committee his family suffered an economic catastrophe after his father, a roofer, died on the job in 2004.

He said his father’s employer disappeared the day after the accident and seven lawyers turned the family down when they sought their help in the courtroom. There was no insurance coverage, forcing Hurtado to give up his college savings to help the family make ends meet, he said.

“I believe there should be some workers' compensation” for construction workers, Hurtado said.

The numbers of employees in Texas without occupational insurance is a statistical extrapolation because only a tiny percentage of employers are in compliance with requirements to notify the state about their workplace coverage or lack thereof, according to TDI records. Oliveira said he's confident the number is somewhere between 500,000 and 600,000 people in Texas. 

The TDI figures show that in 2012 some 81 percent of Texas employees were covered by workers' compensation insurance. Of those who don’t get it, about 70 percent have some type of private occupational insurance. The quality of that coverage varies.

The remaining 30 percent of those outside the workers' compensation are “going bare,” meaning they have no coverage at all. That adds up to at least 500,000 people, TDI officials said Tuesday. 

Among the possible improvements discussed were proposals to make workers’ compensation coverage mandatory for at least danger-prone industries such as construction — an idea that has drawn heavy opposition from the business lobby in the past. Some lawmakers also want to stop the rampant misclassification of employees as subcontractors, which allows employers to avoid paying taxes and benefits.

The practice of worker misclassification is common in the janitorial and building cleaning business, said Don Dyer, CEO of Professional Janitorial Service in Austin.

“You cannot do business in Dallas, Texas, unless you operate illegally,” he told the committee.

Construction contractor Stan Marek of Houston said it’s becoming increasingly difficult to operate a company without engaging in unscrupulous practices because so many others are, and that makes it harder and harder for honest businessmen to compete.

Meanwhile, rank-and-file workers get hit with big tax bills, don’t get paid for overtime and aren’t covered if they get hurt.

“What about he working man?” Marek said. “The working man is the one we have ignored in the entire equation. It’s all about making money.”