When General Contractors Should Require Subs to Carry Workers Comp in Texas

When Should a Texas General Contractor Require Subs to Carry Workers Comp?

In Texas, most private employers can legally opt out of workers’ compensation, which is one reason we still see job sites where some trades are covered and others are not. The problem is that an uncovered injury rarely stays “contained” to the subcontractor who didn’t buy coverage. It can turn into a project delay, a lawsuit, and a fight over contractual indemnity and insurance.

My practical advice as an insurance professional is simple: if a subcontractor’s work creates a meaningful injury exposure, you should strongly consider requiring workers’ comp as a condition of the subcontract. And if you cannot get it, you need a clear backup plan in writing.

Texas data also supports why this comes up so often: the Texas Department of Insurance, Division of Workers’ Compensation (TDI-DWC) reported that about 25% of private-sector employers were non-subscribers in 2022, even though subscription has been trending up. That means you will regularly bid against, and hire alongside, firms that do not carry workers’ comp. (TDI-DWC snapshot on employer participation)

The Texas Reality: Workers Comp Is Optional, But Risk Is Not

Texas is unique. Private employers generally choose whether to buy workers’ comp. TDI-DWC is very direct about it: private employers can choose whether to provide workers’ compensation coverage, and those that do not are “non-subscribers.” (TDI-DWC non-subscriber guidance, updated 12/15/2025)

Where it becomes especially important for general contractors is that many projects are a patchwork:

• The GC may carry workers’ comp.
• Some subs carry it.
• Other subs do not, especially smaller crews. TDI-DWC’s 2022 survey found small employers (1 to 4 employees) had the highest non-subscriber rate (31%). That matters because many specialty subs and “one-crew” operations fall into that bucket. (TDI-DWC snapshot on employer participation)

Public projects are different

If you do governmental building or construction work, the law is much stricter. Texas Labor Code 406.096 requires a governmental entity to require the contractor to certify it provides workers’ comp, and it also requires each subcontractor to provide a certificate of coverage to the GC for the public project. (Texas Labor Code 406.096)

So even if you normally allow certain subs to work without workers’ comp on private jobs, that approach can break down fast on municipal, county, school district, and other public work.

Why Requiring Workers Comp From Subs Is Often the Cleanest Risk Transfer

When a subcontractor carries workers’ comp, a few good things happen from a GC perspective:

• Medical and wage benefits for injured workers have a defined system to flow through.
• You reduce the odds that a hurt worker looks for “someone else on the job” to pay the bills.
• Your contract requirements become easier to enforce because the sub can produce standard proof (policy and certificate). Just as important, you can set expectations up front about documentation and renewals. In our agency’s experience, a lot of disputes happen not because a sub refused coverage, but because a policy lapsed mid-project and no one caught it.

If you want a related GC-friendly process read, we have a step-by-step guide on certificates and proof of coverage in Texas: Certificates of Insurance (COI) in Texas. It pairs well with this article because your contract requirements are only as strong as your COI tracking.

High-Risk Trades: When the Answer Is Almost Always “Yes, Require It”

Some trades consistently generate severe injury exposure. For these, “optional workers’ comp” is a business choice for the subcontractor, but it is a project risk for the GC.

Workers compensation insurance for roofers: a special case in the real world

If you only remember one example, make it roofing. Falls, heat stress, ladder injuries, and material handling losses can be severe and disruptive. That is why we routinely advise GCs to require workers compensation insurance for roofers as a non-negotiable subcontract condition, especially for:

• Tear-offs and steep-slope work
• Any job with multiple crews rotating on and off
• Projects where the roofer is also responsible for temporary dry-in, tarping, or jobsite safety controls If a roofing sub refuses to carry workers’ comp, the GC should assume the sub is shifting a meaningful part of the injury cost and disruption risk onto the project.

Other trades where requiring workers’ comp is usually the right call

• Framing crews
• Concrete and rebar
• Masonry
• Steel erection
• Demo
• Any work involving heights, trenches, confined spaces, or heavy equipment For these categories, we generally recommend you do not rely solely on general liability to “take care of it.” General liability is not designed to replace workers’ comp benefits for injured workers.

The “Independent Contractor” Trap: What GCs Miss Most Often

I hear this weekly: “They are a 1099, so they don’t need workers’ comp.”

That is exactly where exposures sneak in.

The keyword you provided, workers comp insurance for independent contractors, is important because it describes a common Texas jobsite reality. Independent contractors often show up in one of these forms:

• A true one-person operator
• A small LLC with a couple of helpers paid cash
• A sub who claims no employees today but adds labor tomorrow when the schedule tightens From a GC risk standpoint, the problem is not the label. The problem is the injury.

Your contract should address three separate questions

• Does the subcontractor have employees now?
• Will the subcontractor use helpers, day labor, or “labor-only” subs during the project?
• If yes, who provides workers’ comp, and how is it proven? If you want a broader framework for how we think about coordinating coverage for contractors, this guide helps: Construction Insurance for Texas Contractors: Coordinating GL With Other Policies.

Contract Language That Actually Works (Plain-English Checklist)

I am not a lawyer, but I can tell you what tends to work in the field when contracts get stress-tested after an injury. Your subcontract agreement should clearly require the following.

1) A hard requirement to carry workers’ comp, with a Texas-specific fallback

• Require the sub to maintain workers’ comp during the full term of work.
• Require evidence before mobilization and at each renewal. If the sub will not carry it, you need a written alternative that is compliant with Texas law.

Texas Labor Code 406.123 allows a GC and subcontractor to enter a written agreement where the GC provides workers’ comp coverage for the sub and the sub’s employees. The statute also allows the GC to deduct the actual premium cost from amounts owed, if handled properly. (Texas Labor Code 406.123)

This is the legal backbone behind many “wrap” or “contract labor” workers’ comp arrangements for subs that do not maintain their own policies.

2) Spell out that no one steps on site until proof is received

A strong clause is meaningless if the superintendent is allowed to “just let them start and we will get the certificate later.” Make it clear:

• No site access without proof.
• No payment without current proof.
• Lapse in coverage triggers stop-work. For a deeper dive into how GCs should handle proof, endorsements, and COI pitfalls, bookmark: How to Read an ACORD 25 Certificate.

3) Require notice of material changes and cancellations

Certificates do not always create a legal obligation for the insurer to notify you. Your subcontract should require the sub to provide:

• Renewal certificates before expiration
• Immediate notice of cancellation or nonrenewal
• A new certificate if carrier or policy number changes

4) Include clear risk transfer language that matches the insurance

Workers’ comp is only one part of jobsite risk transfer. Your contract should coordinate:

• Indemnity provisions
• Additional insured requirements on general liability
• Waiver of subrogation where appropriate (often requested)
• Primary and noncontributory wording when the project requires it If you are routinely collecting COIs from subs, this page is worth reading and sharing with your PM team: COI for Contractors and Construction in Texas.

When It Can Make Sense for the GC to Provide Workers Comp for the Sub

There are legitimate business reasons to cover a sub under the GC’s workers’ comp program:

• The sub is too small to obtain a policy cost-effectively.
• You need consistent coverage across all trades for a specific owner requirement.
• You want tighter control of jobsite claims handling and return-to-work coordination. Texas Labor Code 406.123 specifically contemplates the GC providing coverage by written agreement and allows premium chargebacks to the subcontractor based on actual premiums. It also requires administrative steps like filing the agreement with the carrier within a short time window. (Texas Labor Code 406.123)

Practically, this approach can work well, but only if you treat it like a program:

• Prequalify subs who will be included
• Maintain payroll and exposure reporting discipline
• Make the deduction and documentation process consistent

My Field-Tested Guidance for Texas GCs (What We Recommend in Practice)

If you are building a policy for your company, here is a simple standard that holds up.

Require subcontractor workers’ comp when:

• The trade has meaningful injury severity potential (roofing, framing, concrete, steel, demo).
• The sub will have multiple workers on site, even if they claim “independent contractor” status.
• The job is public works, or the owner requires it.
• Your schedule is tight enough that an injury could cascade into major delay costs.

Consider a GC-provided option (406.123 agreement) when:

• The sub is a true one-person operator you trust, and you need them on the project.
• The owner wants uniform coverage, and you need consistent compliance.
• You are prepared to administer the program correctly.

Avoid “gray area” compromises like:

• “They signed a waiver.”
• “They have health insurance.”
• “They are 1099 so we are fine.”
• “Their general liability will cover employee injuries.” Those positions may feel convenient before a loss. They rarely feel convenient after.

If you are also trying to tighten up your overall contractor risk transfer approach, our Texas-specific guide on coordinating coverages is a good next read: Independent Contractors in Texas: GL vs Professional Liability vs Workers Comp.

Closing Thought: Optional Coverage Does Not Mean Optional Consequences

Texas gives private employers flexibility on workers’ comp, but the jobsite consequences of an uncovered injury are very real. The best time to solve this problem is not after someone falls, it is in the subcontract agreement, the pre-mobilization checklist, and the COI tracking routine your team actually follows.

For most general contractors, the winning approach is consistent: require workers’ comp for the trades that can break your project and use Texas Labor Code tools only when you intentionally choose to manage that exposure yourself.

BIG - Brock Insurance Group

At BIG, Brock Insurance Group, we help Texas general contractors build subcontractor insurance requirements that are realistic in the field and defensible on paper. That includes reviewing how you are collecting COIs, identifying where your current contract language is not matching real-world practice, and helping you set up options for subs who cannot obtain coverage on their own, including Texas-compliant approaches.

If you are tired of chasing certificates at the last minute or finding out after an incident that a sub is a non-subscriber, let’s fix it proactively. Reach out to learn how we can help meet your needs. Let’s work together to achieve your goals!

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