NONSUBSCRIPTION UNDER THE TEXAS WORKERS’ COMPENSATION ACT

1. NONSUBSCRIPTION UNDER THE TEXAS WORKERS’ COMPENSATION ACT James McCoy The McCoy Law Firm 12400 Coit Rd., Ste. 560 Dallas, Texas 75251 (214) 292-2603 jim@mccoylawpc.com © The McCoy Law Firm 2012

2. Introduction • What is a nonsubscriber? • Participation under the TWCA is voluntary • By opting out of the Act: • Employer is no longer a part of the no-fault administrative scheme of workers’ comp • Instead, employer is subject to a common law negligence lawsuit • Who is prohibited from nonsubscribing? © The McCoy Law Firm 2012

3. Pros and Cons of Becoming a Nonsubscriber • Advantages • Employee must prove negligence • Employer manages medical costs and can encourage a quicker return to work • Employer has greater flexibility and control • Disadvantages • Subject to negligence liability • Litigation costs • Customer and/or contract may require the Employer to carry workers’ comp insurance © The McCoy Law Firm 2012

4. Liability Issues Facing the Nonsubscriber © The McCoy Law Firm 2012

5. Is the Injured Person an Employee? • General test • Right to control the details of claimant’s work • Hours worked • Hiring/firing • Paying wages • Withholding social security and income tax • Furnishing the tools to perform the job • Borrowed Servant Doctrine © The McCoy Law Firm 2012

6. Course and Scope of Employment • No Employer liability if not within course and scope of employment • Injured worker must prove: • (1) injury occurred while he was engaged in or acting in furtherance of Employer's business • (2) injury was of a kind and character associated with and originating in Employer’s work, trade, business, or profession © The McCoy Law Firm 2012

7. Was the Employer Negligent? • What is negligence? • What are the Employer’s duties? • Provide a reasonably safe place to work • Ensure enough workers are available to perform a task safely • Select careful and competent co-workers • Furnish safe and suitable appliances or tools • Establish and enforce rules and regulations for the safety of its employees © The McCoy Law Firm 2012

8. Proximate Cause • Employer’s negligence must be the proximate cause of the employee’s injury • What is proximate cause? • Cause-in-fact • Substantial factor test • Foreseeability © The McCoy Law Firm 2012

9. Available Defenses • Intoxication • Employee’s willful intent • Sole proximate cause (Defense of contributory negligence is not available to a nonsubscriber) • There was a safer alternative • Open and Obvious © The McCoy Law Firm 2012

10. Invalid Nonsubscriber Defenses • No duty owed • Employer is required to provide: (1) proper equipment; (2) access to proper assistance; and (3) appropriate training • Contributory negligence • Comparative negligence • Assumed the risk • Negligence of a fellow employee © The McCoy Law Firm 2012

11. Damages Employer may be liable for: • Past and future medical expenses • Past and future lost wages • Pain and suffering • Mental anguish • Loss of consortium for the spouse and children • Punitive damages Payment and Offset • portion of medical and lost time payments already made to the Plaintiff may be offset against final damages award © The McCoy Law Firm 2012

12. Liability for Wrongful Discharge • 1998 Texas Supreme Court ruling • Provision of the Texas Labor Code prohibiting the firing of an employee who brings a claim against the employer does not apply to nonsubscribers • Thus, no liability for wrongful discharge © The McCoy Law Firm 2012

13. Occupational Injury Benefit Plans • ERISA applies • Must comply with ERISA provisions regarding: • Reporting and disclosure • Fiduciary responsibility • Administration and enforcement • Preemption • Benefit to Employers • Punitive damages not recoverable; No right to a jury trial • Does ERISA preempt employee’s claim for negligence? © The McCoy Law Firm 2012

14. Waivers and Arbitration • Waivers • Pre-injury waiver invalid • Post-injury waivers have been held enforceable in some circumstances • Arbitration Agreements are valid © The McCoy Law Firm 2012