Nonsubscription Compensation

While the federal government has established widespread guidelines for how workers’ compensation should work, state governments are ultimately responsible for how those systems do work. As a result, there are a variety of different types of workers’ compensation systems that address attitudes that prevail in certain states more so than others. One type, although a minority in the United States, actually works without government intervention. This kind of compensation is known as nonsubscription, as companies do not subscribe to the state-provided system.

For certain companies, the prices of state compensation standards may prove prohibitive to profits. Providing compensation coverage on a more individual basis allows employers to address benefits concerns directly without having to consult or work through more rigid state laws or cost models. To some, this may seem like a fragile system, but it has been successfully running for several large companies in states like Texas since the 1980s.

Although this system allows for a unique approach for employers to address specific needs, it does not mean that employers are free to disregard important workers’ rights. Companies that elect to use nonsubscription as their compensation model must adhere to the basic state and federal laws regarding workers’ rights and the details of their compensation packages.

These programs, although minorities across the country, have grown into large-scale administrative bodies. Without state-provided compensation bought into by an employer, nonsubscription companies must establish a strong system that can withstand whatever volume of claims may arise over time. This means that these employers must constantly maintain decent relations and communications with their employees concerning their compensation agreements, or else the entire system may collapse.

As laws vary by state, understanding the local specifics of laborer compensation can reduce abuses in the system. To learn more about compensation and what your state says regarding the law, contact a workers’ compensation attorney.