The workers’ compensation and employers’ liability policy provides two important coverages for Texas employers. The better-known workers’ compensation section takes care of the employer’s obligation to pay workers’ compensation benefits prescribed by law, while the lesser-known employers’ liability section provides coverage for the employer’s legal liability arising out of employee injuries outside the scope of the workers’ compensation law. What types of claims might be covered by the employers’ liability section? The policy specifically lists four types of actions that are intended to be covered by the employers’ liability section: (1) third-party-over actions that result when the injured employee sues another party and the other party counter sues the employer for contributory negligence; (2) loss of services claimed by the spouse of an injured worker; (3) consequential bodily injury claims by family members of the injured employee; and, (4) dual capacity lawsuits, where an employee is injured by the insured’s product. Texas courts generally have not recognized the validity of any of these types of lawsuits, but the policy will defend the employer should such a suit be filed.
Probably the most common employers’ liability claims are those brought by families of deceased employees who claim the employer was guilty of gross negligence that caused the death of the employee. Another type of claim covered by employers’ liability is one involving an employee that is exempt from the workers’ compensation law. These employees’ injuries are not covered by workers’ compensation even when the employer carries a workers’ compensation policy unless the policy has been endorsed with WC 00 03 11 (Voluntary Compensation and Employers’ Liability Coverage). In Texas exempt employees include domestic workers, casual workers engaged in employment incidental to a personal residence, and certain farm and ranch employees. If one of these employees is injured, the employee may sue the employer for negligence. Finally, a Texas employee may elect within five days of the date of hire not to be covered by the employer’s workers’ compensation coverage. If such an employee is injured on the job, he or she may sue the employer for negligence and this lawsuit would be covered by the employers’ liability section.