Employment Practices Liability Trends Employers Should Watch in 2026
Employment practices liability risks are evolving as workplace regulations change, artificial intelligence becomes more integrated into HR decisions, and employees gain new protections. For employers, these changes can create greater exposure to discrimination claims, pay equity disputes, accommodation requests, and other employment-related litigation.
A recent Zurich report on employment practices litigation trends for 2026 highlights several developments businesses should be watching.
Employment-Related Litigation Continues to Rise
Employment-related lawsuits continue to create significant financial and reputational risks for organizations of all sizes.
According to Zurich, workplace discrimination charges filed with the Equal Employment Opportunity Commission (EEOC) increased in 2024. Systemic discrimination lawsuits also rose sharply, signaling an increasingly complex litigation environment for employers.
Strong employment policies, consistent documentation, and regular manager training can help organizations identify and address potential issues before they develop into larger claims.
AI Is Creating New Employment Practices Risks
Artificial intelligence is becoming a bigger part of recruiting, hiring, performance management, and other employment decisions. While these tools can improve efficiency, they can also introduce new liability concerns.
For example, an AI-powered hiring tool could unintentionally disadvantage certain applicants based on how its algorithm evaluates candidates. Employers may face legal challenges if automated employment decisions result in discriminatory outcomes, even when the technology is provided by a third-party vendor.
New state regulations and developing court cases are also expanding the conversation around employer and AI vendor accountability.
Organizations using AI in employment decisions should understand how their tools operate, evaluate them for potential bias, maintain human oversight, and document how employment decisions are made.
Pay Transparency and Pay Equity Remain Key Concerns
Pay transparency requirements continue to expand across the United States. More jurisdictions now require employers to disclose salary ranges or other compensation information in job postings.
At the same time, regulations such as the EU Pay Transparency Directive are increasing the focus on pay equity globally.
Employers should regularly review compensation practices, job descriptions, salary ranges, and job postings. Conducting periodic pay equity audits may also help identify inconsistencies before they become compliance or litigation issues.
DEI Programs Face Changing Legal Scrutiny
Diversity, equity, and inclusion programs remain another evolving area of employment practices risk.
According to Zurich, employers are seeing increased scrutiny of workplace DEI policies along with reverse discrimination claims. This does not necessarily mean employers should abandon their programs. Instead, organizations should regularly review employment practices to ensure policies are lawful, consistently applied, and based on legitimate business considerations.
Accommodation and Remote Work Requests Are Evolving
Employers are also navigating a growing range of accommodation requests, including those involving mental health conditions and remote or hybrid work arrangements.
Determining whether an accommodation is reasonable often requires an individualized review. Employers should have a consistent process for receiving requests, engaging in the interactive process, documenting decisions, and evaluating potential accommodations.
Nuclear Verdicts Can Increase the Cost of Employment Claims
Another significant litigation trend is the continued rise of so-called "nuclear verdicts," generally referring to jury awards exceeding $10 million.
Large verdicts can significantly increase an organization's potential financial exposure and reinforce the importance of proactive employment practices risk management.
Clear policies, thorough documentation, effective manager training, and early response to employee concerns can all play a role in reducing risk.
Does Traditional Insurance Cover AI-Related Liability?
Not always.
As businesses adopt artificial intelligence, they should also consider how their existing insurance policies respond to AI-related claims. Depending on the policy and circumstances, certain AI exposures may be excluded or may not fit neatly within traditional lines of coverage.
The insurance market is beginning to respond with products specifically designed for these emerging risks. For example, Amwins has developed an AI liability product that can provide buyback or stand-alone coverage in situations where AI liability is excluded from traditional insurance policies.
[Download the Amwins Exclusive AI Liability Product Overview PDF]
Coverage availability, eligibility, terms, conditions, and exclusions vary. Businesses should work with their insurance advisor to determine whether their existing policies adequately address their specific use of artificial intelligence.
How Can Employers Reduce Employment Practices Liability Risk in 2026?
Employers can take several steps to better manage emerging employment practices risks:
- Review how AI is being used in hiring and other employment decisions.
- Evaluate AI tools for potential bias and maintain appropriate human oversight.
- Review compensation practices and applicable pay transparency requirements.
- Regularly evaluate employment and DEI policies for consistency and compliance.
- Strengthen processes for handling accommodation requests.
- Train managers on employment practices and proper documentation.
- Review Employment Practices Liability Insurance (EPLI) and other coverage for potential gaps involving emerging risks.
As employment practices and technology continue to evolve, organizations that take a proactive approach will be better positioned to reduce litigation exposure and respond when claims arise.
Protecting Your Business as Employment Risks Evolve
Employment Practices Liability Insurance can help protect organizations against certain claims involving discrimination, harassment, wrongful termination, and other employment-related allegations. The growing use of artificial intelligence also creates risks that businesses should consider as part of their broader insurance and risk management strategy.
DSP Insurance can help your organization review its current coverage, identify potential gaps, and evaluate whether EPLI or emerging solutions such as AI liability coverage should be part of your risk management program.