2026 Mid-Year Management Liability Claims Update - Emerging Risks and Lessons for Insureds

September 2026

As we pass the midpoint of 2026, management liability risks continue to evolve alongside changes in the legal, economic, and regulatory landscape. While market conditions remain stable, organizations continue to face a range of exposures that can lead to costly claims, litigation, and reputational harm.

From employment practices issues and governance concerns to emerging risks surrounding artificial intelligence, organizations should remain focused on proactive risk management and sound decision-making. Below are several trends we believe are worth monitoring during the second half of 2026.

Trend #1:  Retaliation Continues to Be a Leading EPL Concern

Employers continue to face a challenging employment environment, and retaliation allegations remain a frequent component of employment-related litigation. In fact, retaliation is the most frequently cited basis for an adverse employment action and the most common theory of liability, according to EEOC data.  In many cases, retaliation claims can arise even when the underlying complaint proves unsubstantiated, making documentation, consistency, and manager training critical risk-management tools. Retaliation claims remain prevalent and are hard to avoid. Even innocent behavior may be construed as retaliation to an employee who has just made a complaint or exercised their right to paid or unpaid leave.

Retaliation claims can arise from just about any type of underlying conduct, including “whistleblower” complaints, exercise of employee rights under workers compensation or leave laws, cooperation in a workplace investigation, or complaints of underlying discrimination or harassment. The best ways to guard against retaliation claims include documenting everything, implementing formal “no retaliation” policies, using neutral guidelines for employment-related decisions and investigations, training your managers and other employees, and having an EPL policy to help protect against the unexpected.

Trend #2:  Disability Accommodations Remain an Area of Exposure

Requests for workplace accommodations continue to present challenges for employers. According to EEOC data, disability discrimination is the most frequently cited type of discrimination in EPL claims (followed by race and sex).  Failures in the interactive process, inconsistent communication, and inadequate documentation can increase the likelihood of disputes and litigation.

Brokers and insureds should continue focusing on education, process consistency, and early engagement when accommodation issues arise. Laws involving disabilities have been changing more frequently than other areas, so continuing education and training, and seeking guidance from professionals, are recommended. Accommodations also may raise the potential for workplace disruption, and compliance may therefore be difficult when the issues first arise. Such accommodations are often required, so effective and early communication, documentation, and action are also recommended.

Trend #3:  Employment Laws Continue to Evolve

The workplace continues to change, and employment laws continue evolving alongside it. Issues involving workplace flexibility, leave management, pay transparency, and newer protected categories create challenges for employers seeking to remain compliant across multiple jurisdictions.

For example, a California law effective in 2025 requires additional time off for employees who experience a reproductive loss or are victims of a crime or abuse. New laws also protect employees from retaliation when they choose not to attend employer meetings when religion, politics, or unions are discussed. Illinois has also been active in this area, as new laws effective in 2025 include caregiver protections, prohibitions on discrimination based on reproductive health decisions and employer meeting attendance, and increased child labor and workplace privacy protections. 

Furthermore, more states now have pay transparency laws that require disclosure of salary and other compensation information in job postings. A growing number of states have such legislation; many others are considering similar action, and a handful of local laws are in place as well. Given the historical tendency to avoid discussions of pay, these laws may require significant changes for employers in their recruitment, and failure to comply with these laws may result in unexpected liability exposure.

Trend #4:  Emerging Risks We're Watching

Every year brings new areas of concern. As organizations adopt new technologies and navigate a changing legal and regulatory environment, leadership teams must remain focused on emerging exposures.  In this respect and many others, artificial intelligence (AI) looms large.

Many employers now use AI to screen applicants and evaluate employees. Such screens, however, have resulted in claims alleging algorithmic bias, meaning the systems may discriminate on improper bases, such as age, race, sex, or disability. Employers need to be mindful of these concerns, and some jurisdictions have passed laws requiring a “human in the loop.” As a result, employers should not cede all decision-making to AI, even at the initial screening level.

AI has also prompted layoffs and restructuring, which typically results in an uptick in traditional employment claims, like wrongful termination, discrimination, and retaliation. Furthermore, increased AI usage has raised privacy concerns for employees and non-employees alike. Automated tracking and monitoring of employees, particularly remote employees, may raise privacy concerns and thereby result in employment claims.

One other issue warrants a brief discussion here: “reverse discrimination” claims, which are claims brought by majority-group employees.  Although these claims have existed throughout the history of employment practices liability, evolving legal interpretations and heightened attention to DEI-related employment practices may result in an increase in claims alleging unequal treatment, regardless of the claimant's demographic background.

Quotas, set-asides, or explicit preferences based on race or gender are generally unlawful.  But universal, non-discriminatory initiatives that focus on broad-based inclusion and avoid targeted group preferences could remain acceptable, depending on the specific circumstances. To survive legal scrutiny, organizations should document the business rationale behind their efforts, ensuring decisions are clearly linked to performance, innovation, and profitability. Despite the backlash, initiatives like Employee Resource Groups (ERGs) may survive so long as they are reviewed periodically to ensure consistency with evolving legal requirements.

Looking Ahead to the Remainder of 2026

While no organization can eliminate risk entirely, many management liability claims share a common theme: preventable breakdowns in communication, documentation, or process. Employers that prioritize training, maintain strong governance practices, and address issues proactively are often in a better position to mitigate exposure before disputes escalate.

EPL claims will likely continue to be problematic in the short-to-intermediate term due to social inflation and evolving employment law requirements. Costs associated with defending and resolving claims have gone up, so proactive attention is required.  Have a documented policy in the first place.  And then document every employment-related action – whether positive or negative. Furthermore, use the resources that are available to you: consider consulting qualified HR, legal, risk management, or insurance professionals.  

About the Author

Jim Baffa is Vice President of Claims at Berkley Select for Management Liability where he leads a team of managers and experienced adjusters handling management and professional liability claims, including EPL, D&O and LPL. Jim has over twenty years’ experience in insurance law and claims and joined Berkley Select in 2022. He is well-versed in the litigation process and has nationwide experience dealing with high exposure claims and multi-party negotiations, as well as complex appellate issues. 

Disclaimer

Berkley Select is a member company of W. R. Berkley Corporation, a Fortune 500 Company.  The views expressed here are those of the author and do not necessarily represent the views of Berkley Select or W. R. Berkley Corporation.  This document provides general information only and is not legal advice.  Any advice or recommendation made is intended to assist you in reducing risk of loss.  Berkley Select and affiliated companies assume no liability in connection with your use or non-use of the information provided in this document.