Employment Practices Liability Insurance: Claims Every Employer Should Anticipate in 2026
Nobody starts a business expecting to get sued by an employee. But for many businesses, the question is no longer if a claim could happen, but what kind. As such, employment practices liability insurance (EPLI) remains one of the most essential coverages for modern employers.
Heading into 2026, employment-related claims are becoming one of the most predictable — and expensive — risks employers face. Even companies with strong leadership and documented human resources (HR) practices can face accusations of discrimination, retaliation, harassment, or wrongful termination.
With EPLI, businesses can better manage the legal costs and financial consequences of employment-related lawsuits, which are becoming increasingly common in the modern workplace.
What Does Employment Practices Liability Insurance Cover?
EPLI helps protect employers against claims made by employees, former employees, or job applicants who believe they were treated unfairly or unlawfully.
While the details vary by policy, EPLI coverage typically addresses allegations involving:
- Wrongful termination
- Discrimination
- Sexual harassment
- Hostile work environment claims
- Retaliation
- Failure to promote
- Negligent hiring or supervision
In many cases, the most valuable part of EPLI is its coverage of legal defense costs, including attorney fees, court costs, and settlements or judgments (depending on the policy terms).
Another important point: EPLI often responds when managers, supervisors, or leadership are named in the lawsuit because the alleged actions occurred while they were acting in their professional roles. In other words, it is designed for the reality that employment claims usually involve both the organization and the individuals making employment decisions.
What Is the Average EPLI Claim — and Why Are Costs So High?
One of the most searched questions about employment practices liability insurance is simple: How expensive are these claims, really?
According to the Equal Employment Opportunity Commission (EEOC), retaliation and discrimination claims continue to account for a major share of charges filed each year. Employers often incur significant legal fees even when accusations are unproven. The EEOC’s enforcement and litigation statistics show just how active this space remains.
The reason EPLI claims become costly so quickly is that employment cases are time-consuming to defend. Even when an employer believes the complaint is baseless, defense costs can climb due to:
- Extensive documentation and record review
- Depositions involving leadership and HR staff
- Discovery requests for emails, texts, and internal communications
- Expert witnesses
- Settlement negotiations
Employment lawsuits also tend to involve emotional accusations, and juries can be unpredictable. In some cases, there may be pressure to settle early, even when the employer believes they did nothing wrong.
For businesses planning for 2026, EPLI is not just about “bad employers” getting punished. It is about protecting against the reality that legal defense costs alone can create serious financial strain.
Which EPLI Claims Should Employers Expect in 2026?
Workplace culture is evolving, and so are the legal exposures employers face. Here are the claims businesses should be most prepared for in 2026.
Wrongful Termination and Layoff-Related Claims
If economic conditions remain uncertain, layoffs and restructuring will continue across many industries. Unfortunately, layoffs often lead to lawsuits.
Employees may claim they were terminated for an illegal reason, such as discrimination, retaliation, or bias against a protected class. Even if the business has documentation supporting the decision, the former employee may still pursue legal action.
Claims may also stem from disputes over severance agreements, performance reviews, or inconsistent treatment of employees in similar roles.
Discrimination and Harassment Allegations
Discrimination remains one of the most common drivers of employment-related litigation. In 2026, employers should anticipate continued claims tied to:
- Race and ethnicity discrimination
- Age discrimination
- Pregnancy-related discrimination
- Disability discrimination
- Religious accommodation disputes
- Gender identity or sexual orientation discrimination
Harassment claims are also evolving. Many employers think of harassment only in terms of obvious misconduct, but claims increasingly focus on patterns of behavior, workplace tone, or failure to intervene early.
The biggest issue for employers is that harassment claims do not require criminal behavior to become a lawsuit. They often involve allegations of inappropriate comments, favoritism, intimidation, or management inaction.
Retaliation Claims Following Complaints
Retaliation is one of the most common employment claims filed nationwide, and it is likely to remain a major issue in 2026.
Retaliation claims can occur when an employee believes they faced negative consequences after reporting:
- Discrimination
- Harassment
- Unsafe working conditions
- Wage or overtime concerns
- Unethical behavior
The challenge is that retaliation claims often arise even when the employer believes they were acting appropriately. A terminated employee might argue that their dismissal was tied to a complaint they made months earlier, even if performance issues were documented.
This is one reason retaliation claims can be so difficult and expensive to defend. They tend to be layered on top of other accusations and create a “storyline” that plaintiffs’ attorneys know juries take seriously.
Why EPLI and Workers’ Compensation Are Often Confused
Many employers assume employment-related issues are covered under workers’ compensation. That is not how it works.
Workers’ compensation is a no-fault system that covers physical injuries and occupational illnesses. EPLI, on the other hand, addresses claims tied to employment decisions and workplace treatment.
If an employee slips and breaks their wrist, workers’ compensation may respond. If they claim they were fired unfairly or harassed by a supervisor, that falls under employment practices liability insurance.
Understanding this difference between EPLI and workers’ comp matters. Businesses that rely solely on workers’ compensation may discover too late that they have a major coverage gap.
Preparing for EPLI Risk in 2026 Starts With the Right Coverage
Employment practices claims are not limited to “bad workplaces.” They can happen to businesses that are growing quickly, reorganizing leadership, managing employee conflict, or simply dealing with shifting employee expectations.
In 2026, employers should expect continued scrutiny, more complaints, and higher defense costs. EPLI is one of the few insurance solutions specifically designed to protect the business when employment decisions are challenged in court.
If you are unsure whether your coverage is adequate or whether your policy matches your current workforce risks, Oakwood Risk can help. Contact us to review your employment practices liability insurance coverage and ensure your organization is prepared for what 2026 may bring.
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