The employment practices liability (EPL) market remained stable and competitive in 2025, despite the many changes in employment laws and regulations and increased frequency of claims.
Due to the change in administration, there were many changes in the employment space that will continue to have an impact on the employment and labor law landscape. With these changes, we do expect that claim frequency will continue to rise and rate adjustments may be made in more risky jurisdictions and industries.
The year started off with a flurry of executive orders with a clear focus on DEI programs and initiatives. Through these executive orders, the current administration made clear that potentially unlawful DEI practices and policies in the workplace were a key area of interest.
The executive orders were aimed at ending illegal DEI policies and practices at the federal level while also addressing the private sector. Thereafter, the Department of Justice (DOJ) and Equal Employment Opportunity Commission (EEOC) issued guidance for employers relating to DEI initiatives in the workplace. In addition, the Attorney General directed the DOJ’s Civil Rights Division to “investigate, eliminate, and penalize illegal DEI” practices in the private sector and in educational institutions. The Department of Education opened investigations into several universities and the EEOC’s Chair sent investigation letters to 20 top law firms seeking information about their DEI activities.
The DOJ also established the Civil Rights Fraud Initiative, which will use the False Claims Act to investigate and pursue claims against recipients of federal funds who knowingly violate civil rights laws, giving enforcement power to executive orders.
The president also issued an executive order seeking to eliminate disparate impact liability for discrimination and ordering federal agencies to stop enforcement based on disparate impact liability.
Aside from the executive orders, in a unanimous decision in the Ames v. Ohio Dept. of Youth Services case, the Supreme Court of the United States struck down the Sixth Circuit’s “background circumstances” rule, which had required majority-group plaintiffs to meet a heightened evidentiary standard to establish a prima facie case of discrimination under Title VII.
The current administration has changed leadership at the agency level, which will impact the enforcement priorities of these agencies, guidance and policy initiatives. The relevant overhauls for purposes of employment law have been made at the National Labor Relations Board, DOL and the EEOC. These changes will certainly shape the employment law landscape in 2026.
With several states passing pay transparency laws, litigation was on the rise in 2025. The claims were most prevalent in Washington. The Washington Supreme Court ruled on a significant issue regarding standing in Branson, et al. v. Washington Fine Wine & Spirits, LLC. In response to the high frequency of claims, Washington State amended their Equal Pay law to provide some relief to employers in the wake of hundreds of class action lawsuits that were filed. The amendments made changes to the statutory damages that can be recovered by private plaintiffs and provided for a notice and cure period.
In 2024, the Federal Trade Commission (FTC) banned the use of non-compete agreements. Later that year, two federal district courts issued injunctions striking down the rule prior to its effective date. The FTC appealed those decisions under the prior administration. However, under the current administration in 2025, the FTC withdrew its appeals and noted that reviews of non-compete agreements would be done on a case-by-case basis. In addition, many states have passed their own laws restricting the use of non-competes, creating another patchwork of laws across the country.
While the 2025 issues noted above will continue to have prominent seats within the 2026 lineup, below are some additional areas that will be sure to have an impact on the claims and insurance market environment.
In October 2025, Brittany Panuccio was confirmed as EEOC commissioner, which established a Republican majority and restored the Commission’s quorum. As such, we expect to see an even more active EEOC this year where they will likely issue new guidance, increase enforcement activity and make significant policy changes in line with the president’s stated priorities.
In a statement earlier in 2025, Andrea Lucas, Chair of the EEOC, stated the EEOC's priorities to include:
“rooting out unlawful DEI-motivated race and sex discrimination; protecting American workers from anti-American national origin discrimination; defending the biological and binary reality of sex and related rights, including women’s rights to single‑sex spaces at work; protecting workers from religious bias and harassment, including antisemitism; and remedying other areas of recent under-enforcement.”
With a quorum now in place, we expect many of these priorities to come to life in 2026. The EEOC will focus on core discrimination claims, particularly, religious discrimination and accommodation cases, national origin discrimination, discrimination against “majority” group plaintiffs, especially in light of unlawful DEI policies. The priorities are a drastic shift away from the prior administration’s policies, so review of internal policies and procedures will be imperative.
In this heightened political environment coupled with the ever-growing use of social media, there continues to be a crossover between what individuals say through their public posts and their employment. In 2025, we started to see public pressure for individuals to be terminated from their employment based on comments made on social media posts. Given the fast-paced evolution of the internet and the expansion of social media we expect this issue to continue into 2026 and beyond.
The current administration is focused on the development and use of AI. As such, guidance previously issued by the EEOC and DOL has been removed from their websites. At the end of 2025, the president signed the "Ensuring a National Policy Framework for Artificial Intelligence" executive order, which is aimed at “updating existing federal regulatory frameworks to remove barriers to and encourage adoption of AI applications across sectors” and to allow “AI companies … to innovate without cumbersome regulation.” This is again a shift away from the prior administration’s focus on regulating the use of AI. However, while the federal government is encouraging the use and development of AI, states continue to pass legislation to protect against algorithmic bias in the workplace. Pursuant to the recent executive order, these state laws will be evaluated to determine whether they conflict with national policy and/or are onerous. As such, the state of AI regulation remains in flux and remains a top issue for 2026.
This year will certainly continue to present challenges for employers as restrictions at the federal level/changes in enforcement priorities and continuous evolution of state and local laws maintains a patchwork of various laws across the country. However, less federal regulations may not mean fewer claims, as state and local laws often provide broader protection for employees. Employment claims have been on the rise, and we expect them to continue to rise in frequency for the year ahead. While we expect the EPL market to remain stable and competitive, we do anticipate rate adjustments, especially within the more challenging industries and jurisdictions.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
