NEW YORK'S
Employment Practice Liability Insurance

Employment practices liability insurance (EPLI) has become an essential safeguard for businesses navigating the complex landscape of workplace regulations and employee relations. This is especially true in New York, where evolving laws and heightened scrutiny around employment practices demand robust protection for employers. In this comprehensive guide, we’ll explore what EPLI entails, why it’s increasingly critical in New York, and how recent regulatory developments—particularly around artificial intelligence—are shaping the market.

With nearly 70% of legal and HR professionals reporting claims related to discrimination, harassment, or retaliation within the last year, understanding EPLI is more important than ever for New York employers. QBE North America’s Employment Practices Liability Report highlights this rising trend and underscores the need for comprehensive coverage.

Employment Practice Liability Insurance is a specialized insurance policy designed to protect employers from financial losses arising out of claims made by employees alleging wrongful employment practices. These claims typically include allegations of discrimination, harassment, wrongful termination, retaliation, and other workplace-related issues.

In New York, where employment laws are particularly stringent and employee protections robust, EPLI offers a critical layer of defense. It covers legal defense costs, settlements, and judgments that can otherwise be financially devastating for businesses of any size.

Given the increasing frequency of employment-related claims—69% of organizations reported such claims in the past year—EPLI is no longer a luxury but a necessity for employers seeking to mitigate risk and maintain operational stability.

Moreover, the landscape of employment law is continually evolving, influenced by societal changes and heightened awareness of workplace rights. Employers must stay informed about new regulations and legal precedents that could impact their liability. For instance, recent trends have seen a surge in claims related to remote work environments, where issues such as workplace bullying and discrimination can manifest in unique ways. As such, EPLI not only provides financial protection but also encourages employers to foster a more inclusive and respectful workplace culture, which can ultimately lead to higher employee morale and retention.

Additionally, the implications of not having EPLI can be severe. A single lawsuit can drain resources, distract management from core business functions, and damage a company's reputation. In a competitive job market, potential employees often research a company's workplace culture and legal standing before accepting offers. Therefore, having EPLI can serve as a signal to prospective hires that the organization takes employee rights seriously and is committed to maintaining a fair and equitable work environment. This proactive approach can enhance a company’s brand image and attract top talent while minimizing the risk of costly legal disputes.

New York employers face a challenging environment marked by a high volume of employment-related claims. According to recent data, retaliation claims alone constitute 56.8% of all discrimination charges filed with the Equal Employment Opportunity Commission (EEOC), making them the most common type of charge nationwide. This trend is particularly relevant in New York, where whistleblower protections and anti-retaliation laws are strongly enforced.

These statistics highlight why EPLI premiums have been rising sharply. A 2025 industry report notes that average EPLI premiums have increased by 35-50% across most sectors, with some high-risk businesses experiencing hikes exceeding 100% compared to 2024 rates. This increase reflects insurers’ growing concerns about the frequency and severity of claims, as well as the evolving regulatory landscape. IHEPSI’s 2025 report provides detailed insights into these market shifts.

Employers in New York must therefore not only secure EPLI coverage but also understand how to manage risk proactively to avoid costly claims and premium hikes. This involves implementing comprehensive training programs aimed at fostering a workplace culture that prioritizes respect and inclusivity. By educating employees about their rights and the channels available for reporting grievances, employers can mitigate the risk of retaliation claims. Furthermore, establishing clear policies and procedures for addressing complaints can help create a transparent environment where employees feel safe to voice their concerns without fear of retribution.

Additionally, the legal landscape surrounding employment law is continually evolving, with new regulations and case law emerging that can impact employer liability. For instance, recent legislative changes have expanded the scope of protected classes and increased the penalties for non-compliance. Employers must stay informed about these developments and regularly review their policies to ensure alignment with current laws. Engaging with legal experts and industry consultants can provide valuable insights into best practices for compliance and risk management, ultimately safeguarding both employees and the organization itself against potential claims.

One of the most transformative factors affecting employment practices today is the integration of artificial intelligence (AI) in hiring, promotion, and workforce management. While AI offers efficiency and data-driven decision-making, it also introduces new risks, particularly around algorithmic bias.

New York City has taken a pioneering step by becoming the first jurisdiction globally to mandate bias audits for commercial algorithmic systems used in employment decisions. The law requires annual independent audits to assess race and gender bias, aiming to ensure fair and equitable treatment in the workplace. This landmark regulation, known as Local Law 144, reflects growing concerns about the unintended discriminatory effects of AI tools.

However, compliance remains a challenge. A 2024 study found that among 391 employers, only 18 posted audit reports and 13 posted transparency notices, indicating limited transparency and adherence to the law. Moreover, nearly all audits reported an impact factor over 0.8—a threshold often used in employment discrimination cases—suggesting significant potential for bias. These findings emphasize the complexity of addressing algorithmic fairness and the importance of proper oversight. The study on algorithmic accountability sheds light on these challenges.

Mary Anne Mullin, Senior Vice President at QBE North America, aptly summarizes the balancing act employers face: “As hybrid work arrangements, regulations, and technologies like artificial intelligence continue to evolve, employers must balance workplace progress with protection.” EPLI policies are evolving in tandem to address these emerging risks.

As AI systems become more prevalent, the implications of algorithmic bias extend beyond mere compliance; they can significantly influence company culture and employee morale. When employees perceive that hiring and promotion decisions are influenced by biased algorithms, it can lead to feelings of disenfranchisement and distrust. This erosion of trust can hinder collaboration and innovation, as employees may feel less inclined to share ideas or take initiative if they believe their contributions are undervalued due to biased assessments. Furthermore, the reputational risks associated with algorithmic bias can deter top talent from joining organizations that are perceived as unfair or discriminatory.

Moreover, the conversation around algorithmic bias is not limited to just hiring practices; it also encompasses performance evaluations and employee retention strategies. Companies are increasingly leveraging AI to monitor employee productivity and engagement, but these systems can inadvertently propagate existing biases if not carefully designed and implemented. For instance, if an AI system is trained on historical data that reflects past biases, it may continue to favor certain demographics over others, perpetuating inequalities. As organizations strive to create inclusive workplaces, it becomes crucial to critically assess the algorithms that shape their employment practices and to invest in training and resources that promote fairness and accountability in AI systems.

With New York’s stringent employment laws and the new AI bias audit mandate, EPLI coverage is adapting to cover a wider array of risks. Traditional EPLI policies typically cover claims related to discrimination, harassment, wrongful termination, and retaliation. However, as technology-driven risks grow, insurers are increasingly scrutinizing how AI tools are used in employment decisions and may require employers to demonstrate compliance with bias audit regulations.

Employers should expect EPLI underwriters to consider their governance around AI systems, including whether bias audits are conducted and transparency notices are posted. Failure to comply with New York’s Local Law 144 could not only lead to regulatory penalties but also impact EPLI coverage terms and premiums. As AI becomes a more integral part of the hiring and management processes, employers must ensure that their use of these technologies is not only effective but also ethical and compliant with evolving legal standards.

Moreover, the implications of AI in the workplace extend beyond just compliance; they also touch on employee morale and organizational culture. Companies that prioritize ethical AI usage and transparency may find themselves more attractive to top talent, who increasingly value workplaces that demonstrate social responsibility. This shift in employee expectations can further influence EPLI considerations, as a positive workplace culture can mitigate risks associated with employee claims. Thus, investing in robust training programs and clear communication regarding the use of AI can serve as both a protective measure and a strategic advantage in the competitive New York job market.

Despite premium increases, the market outlook remains cautiously optimistic. According to Alera Group’s 2023 Property and Casualty Market Outlook, “The market has gained confidence in Employment Practices Liability Insurance (EPLI) as recent rate increases and coverage restrictions foretell favorable underwriting results.” This suggests that insurers are becoming more selective but also more capable of managing risks effectively, which benefits well-prepared employers. Alera Group’s insights provide valuable context for this evolving market. As businesses navigate these changes, they must remain proactive in their risk management strategies, ensuring that they not only comply with regulations but also foster an inclusive and supportive work environment that can withstand scrutiny.

Given the heightened risk environment, New York employers should adopt a proactive approach to managing employment practices liability. Here are some essential best practices:

• Implement Robust Anti-Discrimination and Anti-Retaliation Policies: Clear, well-communicated policies help prevent claims and demonstrate good faith efforts to comply with the law.
• Conduct Regular Training: Training managers and employees on workplace conduct, diversity, and inclusion reduces the likelihood of harassment and discrimination.
• Ensure Compliance with AI Bias Audits: For employers using algorithmic systems in hiring or promotion, conducting annual independent bias audits and posting transparency notices as required by NYC Local Law 144 is critical.
• Maintain Thorough Documentation: Documenting employment decisions and investigations can be vital in defending against claims.
• Work Closely with EPLI Providers: Engage with insurers to understand coverage limits, exclusions, and any new requirements related to AI or regulatory compliance.

By integrating these practices, employers can not only reduce their exposure to claims but also potentially moderate premium increases by demonstrating risk management diligence.

In addition to these foundational strategies, it is crucial for employers to foster an inclusive workplace culture that encourages open communication. Creating an environment where employees feel safe to voice their concerns without fear of retaliation can significantly decrease the likelihood of disputes escalating into formal claims. Regularly scheduled town hall meetings or anonymous feedback channels can facilitate this dialogue, allowing employees to express their thoughts on workplace dynamics and policies. Moreover, having a designated ombudsperson or HR representative who is trained to handle sensitive issues can provide employees with a trusted resource for addressing grievances early on.

Furthermore, employers should stay informed about the evolving legal landscape surrounding employment practices. This includes keeping up with changes in local, state, and federal laws that may impact their policies and practices. Engaging legal counsel for periodic reviews of employment policies and practices can ensure compliance and help mitigate risks associated with potential claims. Additionally, participating in industry forums or workshops can provide valuable insights into emerging trends and best practices in employment law, equipping employers with the knowledge needed to adapt their strategies effectively.

The landscape of employment practices liability insurance in New York is poised for continued evolution. As technology advances and regulatory frameworks become more complex, employers will face new challenges and opportunities in managing workplace risk.

Ongoing developments in AI regulation, such as expanding bias audit requirements beyond New York City or introducing similar mandates in other states, could further influence EPLI coverage and underwriting standards. Additionally, the persistent rise in retaliation claims and other employment disputes will keep EPLI at the forefront of risk management strategies.

Ultimately, New York employers who stay informed about legal changes, invest in compliance and training, and partner with knowledgeable EPLI providers will be best positioned to navigate this dynamic environment successfully.

For businesses seeking to deepen their understanding of EPLI and its implications, resources like the QBE North America Employment Practices Liability Report offer valuable insights into emerging trends and risk factors.

Moreover, as the workforce becomes increasingly diverse and remote work arrangements gain traction, the need for comprehensive EPLI coverage will only intensify. Employers must be vigilant in addressing the unique challenges posed by remote work, such as maintaining a cohesive company culture and ensuring equitable treatment across different locations. This shift towards a more flexible work environment necessitates a proactive approach to risk management, where EPLI policies are regularly reviewed and adapted to reflect the evolving nature of employment relationships.

Furthermore, the growing emphasis on mental health and employee well-being is reshaping the conversation around workplace practices. Companies that prioritize mental health initiatives and foster an inclusive environment may not only mitigate potential claims but also enhance employee satisfaction and productivity. As such, integrating these considerations into EPLI strategies will be crucial for New York employers aiming to stay ahead of the curve in an increasingly competitive job market.