Texas Supreme Court WC Decision Concerns NAII

The Texas workers’ compensation system faces a serious threat if the state legislature does not act to fix a loophole that allows employers to opt out of the system while requiring their employees to waive the right to sue over workplace injuries.

The Texas Supreme Court recently ruled in Lawrence v. CDB Services that waivers used by employers who do not participate in the workers’ compensation system are not prohibited from such waiver requirements by the Workers’ Compensation Act. In this case, Lawrence agreed to waive his right to sue in exchange for the employer benefit plan that provided specified coverage for workplace injuries. The court stated that absent clear legislative intent to prohibit such agreements, the waivers were enforceable and not void on any public policy grounds. The court held that any public policy concerns should be addressed by the state legislature.

While the court was deciding the case, the state senate passed legislation (SB 624) that would prohibit an employer from using pre-injury waivers and would void any current agreements. The bill is now in the House Committee on Business and Industry.

“The current law poses a serious threat to the workers’ compensation system,” said Nancy Schroeder, assistant vice president, workers’ compensation for the National Assoc-iation of Independent Insurers (NAII).

“The waivers remove the incentive to participate in the state workers’ compensation system. In addition employees are potentially put in a vulnerable position if their employer’s benefits are not adequate. “The senate bill addresses a scenario that was not anticipated under the original act and will ensure that the interests of employees are protected while maintaining the employer’s ability to opt out of the workers’ compensation system.”

Topics Texas Workers' Compensation