The résumé said paralegal. The offer letter, though, said something bigger: you’re an employer now. One hire converts a practice into a workplace, with payroll obligations, a workers’ compensation decision unique to Texas, and a category of legal exposure most lawyers have never had to price. Here’s the setup, in order.
The short answer
Four workstreams before the first paycheck: payroll infrastructure, the workers’ comp decision, employment-practices exposure, and a benefits answer. In Texas, workers’ comp is famously optional for most private employers — but opting out (“nonsubscribing”) surrenders your best defenses if an employee is injured, so treat it as a risk decision, not a cost-saving default. And EPLI — coverage for hiring, discipline, and termination claims — becomes relevant the day the employment relationship exists, not at some future headcount.
1. Payroll: the compliance clock starts at hire
Federal withholding, unemployment tax registration, I-9 verification, and a payroll cadence that never slips — plus the classification question (employee vs. contractor) that firms get wrong at real cost. This is commodity work that still has to be owned; it’s the first piece firms typically hand to a managed back office.
2. The Texas workers’ comp decision
Texas stands alone: private employers can generally choose not to carry workers’ compensation. The trade is stark. Subscribers get the comp bargain — scheduled benefits, and employees generally can’t sue for negligence. Nonsubscribers lose their common-law defenses: in an injury suit, defenses like contributory negligence and assumption of risk are stripped away, and one office injury can become open-ended litigation. For a small firm, comp premiums for office staff are modest; the asymmetry usually argues for subscribing. Make the call deliberately, with an advisor who prices both sides.
3. EPLI: the exposure the offer letter creates
Employment-practices liability — wrongful termination, discrimination, harassment, retaliation claims — doesn’t wait for a big staff. Claims arise from one employment relationship going sideways, and defense costs run five figures before any merit is decided. Your malpractice policy doesn’t cover this; EPLI does, and it’s a standard panel addition at the first hire.
4. The benefits question, honestly
Your first hire will ask about health coverage — maybe in the interview, certainly by year two. You don’t need a big-firm package on day one, but you need an answer: what you offer now, and when the real package arrives. With employer health costs passing $18,500 per employee, the answer takes planning, and pooled small-group programs are how small firms make it feasible earlier than they expect.
One desk, or five vendors
Notice what just happened: one hire touched payroll, workers’ comp, EPLI, and benefits — four vendors’ territories, or one curated relationship’s Tuesday. This is the moment firms either start collecting vendors or start consolidating. The firms that consolidate at hire one never have the untangling project at hire five.
Hiring soon? Fifteen minutes with an advisor before the offer letter beats four setup scrambles after it.
FAQ
Is workers’ comp required for a Texas law firm’s employees?
Generally no — Texas is the only state where private employers can opt out. But nonsubscribers lose core legal defenses in employee-injury suits, so most advisors treat subscribing as the prudent default for firms.
When does a law firm need EPLI?
At the first employee. Employment-practices claims arise from the relationship itself, and defense costs are significant regardless of firm size.
What payroll setup does a first hire require?
Withholding and unemployment registrations, I-9 compliance, a reliable payroll run, and correct employee-vs-contractor classification — in place before the first paycheck.
Do we have to offer health benefits to one employee?
No mandate at that size — but you need a credible answer to the benefits question, and pooled programs make real coverage feasible sooner than most small firms assume.
Companions: Solo to five attorneys · What health coverage costs · Back Office services
