Key takeaways

• Pay transparency expansion: A growing number of states are implementing pay transparency laws requiring salary range disclosures and benefits information in job postings, increasing the risk of class actions and regulatory enforcement.

• Coverage considerations: Pay transparency claims are testing traditional employment practices liability (EPL) policy language, driving coverage disputes regarding the definition of “wrongful employment act” and covered loss.

• Pay equity litigation: Greater transparency around compensation practices may contribute to increased pay equity claims. Rising “nuclear” verdicts and defense costs, driven in part by social inflation, are contributing to increased liability risk for employers.

Compensation-related employment risk continues to evolve as pay transparency laws expand and pay equity litigation remains active. New disclosure requirements are increasing visibility into employer pay practices, while recent class actions and coverage disputes highlight how these claims can create significant defense costs and insurance implications for policyholders.

Pay transparency laws and EPL coverage considerations

Pay transparency requirements have expanded significantly in recent years as lawmakers seek to address wage disparities and increase compensation visibility in hiring. These laws typically require employers to disclose salary ranges in job postings or provide compensation information to applicants during the hiring...

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