What insurance is required when hiring workers?

Required Insurance When Hiring Employees in Texas

When hiring employees in Texas, businesses must secure specific insurance coverage to comply with state regulations and protect both the company and its workforce.

Workers' Compensation Insurance

Texas does not require private employers to carry workers' compensation insurance. However, if a business opts out, it must notify the Texas Department of Insurance, Division of Workers’ Compensation, and employees lose certain legal protections. Many employers choose to carry this insurance to cover medical expenses and lost wages for employees injured on the job.

Unemployment Insurance

Employers in Texas must register with the Texas Workforce Commission (TWC) to pay state unemployment taxes. This insurance provides temporary benefits to eligible employees who lose their jobs through no fault of their own. Proper payroll setup and tax reporting are essential for compliance.

Federal Insurance Requirements

• Federal Unemployment Tax Act (FUTA): Employers must pay federal unemployment taxes, which fund unemployment compensation at the federal level.
• Social Security and Medicare: Employers are required to withhold and match payroll taxes for Social Security and Medicare.

Additional Insurance Considerations

• Health Insurance: Businesses with 50 or more full-time employees must comply with the Affordable Care Act (ACA) employer mandate.
• Liability Insurance: Though not required by law, general liability insurance helps protect against workplace claims.

As of 2026, always verify current requirements with the Texas Department of Insurance and Texas Workforce Commission to ensure compliance. Proper recordkeeping and timely reporting of insurance coverage and payroll taxes are critical parts of operational management when hiring employees in Texas.