Across the country workers comp opt out are legislative efforts to allow employers to “opt out” of the traditional workers’ compensation systems in several states. Generally speaking, opt out laws take government out of the equation and allow employers to determine the nature of the benefits and the terms of the claims administration, as well as appeal processes. Recently, the Oklahoma Supreme Court ruled that Oklahoma’s opt out law unconstitutional leaving only Texas with an opt out system. Vasquez v. Dillards, Inc. 2016 OK 89.

Unlike other states, Texas has always had a voluntary workers compensation system so a comparison to contemporary opt out legislation is not perfect. Generally, in Texas participation in the workers’ compensation system is “voluntary and elective as to both employer and employee.” An employer has three options, 1) be covered under their workers compensation system, 2) not be under workers comp but establish an alternative benefit plan to provide certain benefits for on-the-job injuries at its discretion, or 3) have no coverage in which event it is liable under tort law but has no common law defenses such as contributory negligence, assumption of risk and fellow employee negligence. Note if the employer chose option (1) for coverage, the injured employee can still opt out and sue the employer in tort, however then the employer retains the common law defenses.

Although not found unconstitutional on this basis, the Oklahoma law allowed employers to opt out of the government workers compensation system but still enjoy the exclusive remedy protection from tort suits.

Apart from the individual damage incurred by an injured worker without an adequate remedy, the parsimonious proposed opt out legislation enables employers to effectively shift the cost of paying for work-related injuries to the taxpayer via Medicare, Medicaid and Social Security.

McCormick Law Office in Milwaukee, Wisconsin is helping lead the fight against workers comp opt out legislation in Wisconsin.