Insurance Marketplace Realities 2026 Spring Update – Employment Practices Liability /Wage and Hour

Key takeaway

EPL market stabilization continues, even in an ever-expanding litigation landscape under the current administration. However, signs of market firming are present due to rising frequency of claims.

The wage and hour market continues to evolve even as claim frequency and severity increase. As the market evolves, more opportunities arise for smaller headcount employers with carriers still willing to deploy significant limits.

Competition is keeping the EPL market stable

• Rates: Given the competition and capacity in the EPL market, we do expect to see mostly flat renewals with modest increases. However, we are starting to see modest rate increases in high-risk jurisdictions and industries. Outside of those high-risk jurisdictions and industries and assuming no change in risk profile and no losses, rate increases are more likely to be close to or at flat. Looking further ahead, as claim frequency and severity continue to increase, the EPL market will likely start to see more increases over the next 12–18 months.
• Retentions: Markets continue to seek separate retentions for class actions, especially in California and high-wage earners in certain industries (g., healthcare and tech). Some domestic markets have also sought separate retentions for high-risk states (e.g., California, Illinois, New York and New Jersey) and sometimes even county-specific retentions.
• Limits: Both Bermuda and domestic markets are managing their capacity on any given risk. Domestically, markets are providing between $5 million and $10 million. In Bermuda, markets are providing $15 million ($10 million in some instances).
• Excess: EPL markets are generally following primary increases in addition to looking to adjust increased limit factors (ILFs) for certain risks.
• Capacity: Overall capacity in the EPL market is stable and competitive, except for troublesome industries.
• Underwriting focus areas: Primary focus continues to be headcount, industry and location. Underwriters are also focusing on AI usage in the workplace, company approaches to DEI, managing EPL exposure in a new political environment and new EEOC enforcement priorities (i.e., national origin and religious discrimination) and compliance with state pay transparency laws. Many markets have separate questionnaires for biometrics, sexual harassment and pay equity and some markets have started to utilize separate questionnaires for compliance with state pay transparency laws.
• Coverage: Some markets have started to add wage transparency exclusions or sublimits. In addition, markets continue to add privacy/biometrics exclusions, and in some cases, broaden existing exclusions. Small sublimits for defense cost coverage are available from certain insurers upon satisfactory completion of the previously mentioned biometric questionnaires.
• Industry notes: Industry rates remain in line with overall guidance. The healthcare and tech industries are most likely to see separate retentions for high-wage earners.

EPL and wage and hour risk trends

1. Interplay of EEOC enforcement and state regulatory landscape
   • The EEOC headed into this year with a quorum, so it is expected that there will be increased enforcement activity.
   • Chair of the EEOC, Andrea Lucas, has stated their priorities will focus on, among others, DEI-motivated race and sex discrimination, anti-American national origin discrimination and protecting workers from religious bias and harassment.
   • These priorities highlight a shift in traditional EEOC enforcement and prior administrations, so there will be some notable changes as well as some areas that may conflict with state laws and regulations.
   • The EEOC issued several pieces of guidance related to their stated priorities. One focuses on anti-American discrimination and identifies unlawful practices related to the same. Another focuses on protecting religious freedom at work. Chair Lucas has stated that the EEOC will continue to enforce religious accommodation in the workplace ensuring workers do not have to choose between their faith and their job.
   • The EEOC also rescinded its Enforcement Guidance on Harassment in the Workplace. Practically speaking, this does not impact the law and the EEOC still intends to pursue harassment claims. However, the EEOC will not pursue harassment claims based on transgender status. Not all states agree with the EEOC, so there will be state laws that prohibit harassment based on sexual orientation and gender identity, which will create a patchwork of state laws and conflicts with federal priorities.
   • The EEOC is expected to make changes to the Pregnant Workers Fairness Act. This will likely lead states to pass their own laws, which will again create a patchwork of laws across the country and make compliance quite challenging for multi-state employers.
2. Artificial intelligence in employment is an evolving risk
   • Executive Order Ensuring a National Policy Framework for artificial intelligence is aimed at curtailing the state authority to regulate the use of AI. It establishes a multi-pronged enforcement strategy designed to centralize AI governance and preempt conflicting state laws.
   • Many states have passed algorithmic bias regulations, so the fate of those remains in flux. At the state level, several states have enacted AI governance rules for the workplace, such as Illinois, California and Texas.
   • Meanwhile, AI continues to be used in hiring and other workplace decisions. Although the fate of algorithmic bias regulations remains in flux, the anti-discrimination laws that would be implicated and Title VII remain in full force. Companies should continue to test and audit their AI tools on a regular basis.
3. Pay transparency laws an area of underwriting focus
   • In an effort to close the wage gap, there is an evolving patchwork of state laws that require disclosure of benefits and/or salary in job postings, with WA State the most problematic from a compliance and litigation perspective.
   • Globally, the EU pay transparency directive (Directive (EU) 2023/970) aims to close the gender pay gap with increased transparency and accountability as well. EU member states have until June 7, 2026, to transpose the directive into national law.
   • Given the varying laws, underwriters are focused on this issue and ensuring organizations have the proper protocols in place to be compliant.
4. Wage and hour exposure continues to increase
   • The risk of wage and hour claims applies to all U.S. employers. As laws change and vary from state to state (and sometimes county to county), compliance has become extremely difficult for multi-state employers.
   • The Department of Labor’s Wage and Hour division recovered over $184 million in back wages in fiscal year 2025, an increase from fiscal year 2024, which was just under $150 million.
   • At least 19 states have implemented significant minimum wage increases beginning January 1, 2026, with some surpassing $15/hour for the first time.
   • Six states — California, Colorado, New York, Washington, Alaska and Maine — have increased salary thresholds for exempt employees. These can vary by jurisdiction and sometimes job category. Non-compliance may lead to overtime and misclassification claims.
   • The wage and hour market in Bermuda has 11 markets with appetite, six of those on a primary basis. The market has over $100 million in available limits.