In Texas, Nonsubscription is an alternative to subscribing to the Workers Compensation program.

What you need to know about Nonsubscription:

The new age of employment and industry specific structures can make nonsubscriber placements difficult. In many instances, the actual named insured entity may have a number of differing employment relationships ranging from their W-2 employees, 1099 workers, and/or employee leasing.

Most nonsubscriber insurers define a “Covered Person” as someone who works at the direction of the employer and receives wages directly from that employer as a payroll function. There is generally a defined exclusion for independent contractors. 1099 contractors receive their wage for services and leased employees receive their wages from the leasing company. The court systems have continued to leave open a cause for debate via statutory employment and borrowed servant doctrines. To gain status under either of these doctrines, the 1099 or leased worker must bring a formal action against the person they were performing services for, and in most cases this will be your named insured.

The other intrinsic fact relating to a possible hole in this structure extends to the Arbitration Agreement as well as ERISA and Summary Plan Documents. This should be carefully considered at the implementation of the nonsubscribing program. Contractual gaps may turn into surprises should a third party seek and obtain borrowed servant status or your named insured is declared a statutory employer by a court of law.

These two modes of employment structure create holes in most nonsubscriber programs that can be filled with a variety of products and procedures. The Colemont Worker Injury Team has years of experience that our producers rely on to address issues such as this. This is why agents rely exclusively upon the Colemont Worker Injury Team for their nonsubscription placements.

Benefits

• Reduces impact on the employer's financial assets in the event of occupational accidents.
• Complements loss control programs and ERISA plan documents that govern such programs.
• Provides flexible coverage options to meet virtually any company's risk management programs.
• Helps in recruiting and maintaining a skilled workforce by providing insurance to cover costs associated with workplace accidents.

4 Easy Steps to becoming a Nonsubscriber

1. Correctly Exit the Workers Compensation System: It is the responsibility of the Employer to Exit the Comp. system correctly. If you simply "Drop" compensation, you are Still Part of the System and subject to all its rules. To exit the WC system, you must:
   • File a DWC Form 5 with the state
   • Post notices in the workplace
   • Notify existing employees of coverage termination
   • Begin notifying new employees of Non-Subscriber status
     
     
2. Replace compensation with another benefit program.
   
   
3. Secure ERISA document describing benefits: In order to help protect you from legal questions concerning the application of the Benefit plan, it is highly recommended that the Employer purchase an ERISA document written specifically for his particular Benefit plan. Some Benefit plans come with an ERISA document. An ERISA document can be written for you by an Attorney.
   
   
4. Install a Quality Safety Program: The employer’s best defense against a negligence claim is a Quality Safety Program. In order for the employee to win a case against an employer he Must prove Negligence. Yes, an Employer can be negligent, but the act of Installing, Maintaining and Documenting a Quality Safety Program is the best way to defend yourself against a negligence claim. You can secure the services of a Safety Consultant or Company.