California audit rules
The WCIRB's rules, officer limits, dual wage classes and disputes.
Learn more →Texas workers' comp audit
Workers' comp audits in Texas: NCCI rules, non-subscribers and disputes
Texas is the one state where most private employers can choose not to carry workers' comp. If you do carry it, here is how the audit works and how to dispute one.
Quick answer
Texas uses NCCI's Basic Manual with Texas exceptions, adopted by the Commissioner of Insurance and required for policies effective on or after 10/1/2014. Texas kept its own class codes rather than the national ones. NCCI assigns class codes, inspects businesses on request and runs the appeals process, and the Texas Department of Insurance (TDI) approves or rejects NCCI's filings.
Under these rules the premium part of overtime and voluntary tips are excluded from payroll, and executive officers count at a weekly minimum and maximum set in TDI's loss cost filing. Owners and officers are covered unless an endorsement excludes them.
Most private employers in Texas may choose not to carry coverage. These non-subscribers have no premium audit, but they have filing and notice duties with TDI's Division of Workers' Compensation, and they lose key defenses if an employee sues.
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How Texas counts payroll at audit
From TDI orders adopting NCCI's Texas rules. Officer limits are weekly, effective 7/1/2026.
| Item | Texas rule | What to keep |
|---|---|---|
| Overtime | The extra part of overtime pay is excluded when the records show it. For double time recorded separately, one half of the double time pay is excluded | Payroll register with overtime premium in its own column |
| Tips | For policies effective on or after 1/1/2024, voluntary tips are excluded. Service charges and automatic gratuities are payroll | Tip reports kept apart from service charges |
| Executive officers | Counted at no less than $150 and no more than $1,200 a week each | Names, titles, pay and weeks active |
| Owners and officers | Sole proprietors, partners and corporate officers are covered unless the policy has an endorsement that excludes them | A copy of any exclusion endorsement |
| Non-subscribers | No policy and no premium audit, but DWC Form-005 must be filed every year between February 1 and April 30, and employees must be notified | Filed Form-005 copies and the posted Notice 5 |
| Government building projects | A contractor on a building or construction contract with a governmental entity must certify coverage for each employee, and subcontractors must give certificates of coverage before starting work | Certificates of coverage for everyone on the project, and the posted site notice |
Texas-specific mistakes
- Using a national NCCI class code number on a Texas policy, when Texas kept its own codes
- Lumping service charges in with tips, or tips in with wages
- Assuming an owner or officer is excluded when the policy has no exclusion endorsement
- Dropping coverage mid-year without filing Form-005 within 10 days and telling employees within 15 days
- Starting a government building job without collecting certificates of coverage from every subcontractor
- Disputing an audit without first paying the undisputed premium, which NCCI's process requires
Texas audit checklist
- Confirm whether you carry a policy (subscriber) or not (non-subscriber). Non-subscribers: check that this year's DWC Form-005 was filed between February 1 and April 30.
- Pull payroll by employee and class for the policy period, with overtime premium shown separately.
- Separate voluntary tips from service charges and automatic gratuities.
- List every owner and officer with pay and weeks active, and find any exclusion endorsement.
- For government building projects, collect each subcontractor's certificate of coverage.
- Collect certificates of insurance for every other subcontractor for the dates of the work.
- Check the final audit results line by line against your records.
How a Texas audit dispute works
From NCCI's dispute resolution process and TDI's orders. You do not need a lawyer.
- Try to resolve the dispute directly with your carrier, in writing, with the records that support your position.
- Pay the carrier all undisputed premium, and give it an estimate of the premium in dispute with a written explanation.
- If that fails, ask NCCI to review it through its dispute resolution process (disputes about class codes, payroll allocation and the experience mod). NCCI can send it to Texas's five-member appeals board.
- If you disagree with the appeals board, you as the policyholder can appeal to the Texas Department of Insurance. The board's decision notice gives the deadline.
Keep reading
Florida audit rules
Construction exemptions, subcontractor proof and disputes.
Learn more →New Jersey audit rules
CRIB rules, tips as payroll, officer limits and appeals.
Learn more →New York audit rules
NYCIRB rules, officer limits, the construction cap and appeals.
Learn more →Pennsylvania audit rules
PCRB rules, full overtime, officer exclusions and appeals.
Learn more →Payroll reconciliation template
A free template that lines up the payroll register, Form 941s, and workers' comp payroll by quarter.
Learn more →Frequently asked questions
Does Texas require workers' comp insurance?
Not for most private employers. They can choose to carry it (subscribers) or not (non-subscribers). Non-subscribers must file DWC Form-005 with TDI's Division of Workers' Compensation each year between February 1 and April 30, post notice for employees, and lose defenses such as contributory negligence if an injured employee sues.
Does Texas use NCCI class codes?
Texas uses NCCI's Basic Manual with Texas exceptions, but it kept its own Texas classification codes instead of switching to the national codes used in most NCCI states.
What are the Texas executive officer payroll limits?
Effective 7/1/2026, TDI's loss cost filing sets a minimum of $150 and a maximum of $1,200 a week for each executive officer.
Are tips included in Texas workers' comp payroll?
For policies effective on or after 1/1/2024, voluntary tips are excluded, while service charges and automatic gratuities are included.
Do contractors on public jobs in Texas need coverage?
Yes. On a building or construction contract with a governmental entity, the contractor must certify coverage for each employee, and everyone working on the project must provide a certificate of coverage before starting.
How do I dispute a Texas workers' comp audit?
Work it out with the carrier first and pay the undisputed premium. Then use NCCI's dispute resolution process and the Texas appeals board. The policyholder can appeal the board's decision to TDI.
Sources
Official rating bureau and state agency pages this guide is based on.
- TDI: Commissioner's bulletin adopting NCCI manuals for Texas (2014)
- TDI: 2026 Texas loss costs and officer payroll limits
- TDI: Order approving the tips rule effective 1/1/2024
- TDI: Workers' compensation coverage for employers
- TDI: DWC Form-005, employer notice of no coverage
- TDI: Texas Workers' Compensation Act
- TDI: Notice on the NCCI dispute appeal process (2016)
- NCCI: Dispute resolution process
Important scope note
Practical prep guidance only.
This page summarizes Texas rules published by the Texas Department of Insurance and NCCI for audit prep. It is not legal, tax or insurance advice, it is not a ruling on your policy, and your policy, the Texas manual and your carrier's audit are the final word.
Get your Texas records in order before the audit
Start with the free checklist, check the likely bill with the estimator, or use the workbook to keep payroll, officer pay and subcontractor certificates in one file.