Driven by shifting federal enforcement priorities and recent Supreme Court decisions, reverse discrimination and religious accommodation claims are becoming more viable and potentially costlier for employers. But they’re not replacing traditional employment practices liability exposures, which leaves employers between a rock and a hard place.
Here’s how employers can stay ahead of potential risks from these emerging claims.
Shifting enforcement priorities
President Trump’s return to office in 2025 brought a marked shift in federal enforcement priorities (opens a new window). One of the administration’s aims has been to abolish diversity, equity, and inclusion (DEI) programs (opens a new window), which officials have characterized as wasteful and discriminatory. This coincides with wider backlash in the U.S. against environmental, social, and governance (ESG) investment principles and growing reticence among companies to make public commitments to social justice causes.
Practices tied to DEI programs, including employee resource groups (ERGs) were widely embraced under prior administrations and often heralded by businesses, employees, and consumers. However, they are now being reevaluated in light of federal agency scrutiny of whether they could be construed as conferring preferential treatment based on protected characteristics such as race, gender, and national origin.
Within this broader context, the Equal Employment Opportunity Commission (EEOC) has emerged as a key driver of change, particularly through its targeted focus on so-called “reverse discrimination” claims. The agency is increasingly supporting cases brought by members of historically majority groups, a notable shift from its traditional emphasis on protecting minority or historically disadvantaged employees.
While reverse discrimination claims have always been legally viable, they have historically been more difficult to prove than “traditional” discrimination claims brought by individuals in historically minority classes. However, the Supreme Court’s 2025 opinion in Ames v. Ohio Department of Youth Services (opens a new window) removed a key procedural hurdle that had long applied to majority-group plaintiffs.
Previously, these individuals often had to satisfy a heightened evidentiary burden, sometimes referred to as the “background circumstances” test, by demonstrating that an employer was unusually inclined to discriminate against majority groups. By eliminating that requirement, Ames places all plaintiffs alleging discrimination on equal footing, effectively lowering the barrier to entry for reverse discrimination claims and making them easier to prove.
Alongside reverse discrimination and anti-DEI efforts, the EEOC’s recently published FY 2027 Agency Performance Plan (opens a new window) emphasizes its focus on religious discrimination claims, which a separate Supreme Court decision has made it harder for employers to dispense with.
The court’s 2023 ruling in (opens a new window) significantly raised the threshold employers must meet to deny religious accommodation requests. Historically, employers could reject requests, such as schedule changes for religious observance, by showing only a de minimis burden. That standard has now been replaced with a requirement to demonstrate meaningful operational or financial hardship, making it much more difficult for employers to justify denials.
The practical effect is that employers will likely need to grant more accommodation requests and approach refusals with far greater caution.
Competing demands for employers
Importantly, this evolving enforcement posture does not signal any retreat from traditional discrimination claims. Even as reverse discrimination and religious accommodation issues gain traction, employers should expect a continued steady flow of the more garden-variety claims involving race, gender, and other historically protected categories that have long made up the bulk of EPL claims filings.
Employers must now manage both traditional and newer versions of discrimination claims at the same time. They must also ensure their decisions are fair, consistent, and clearly documented so they can demonstrate that their actions are based on neutral, objective reasoning if challenged.
Beyond legal liabilities and compliance obligations, employers face growing pressure from multiple directions on DEI and related topics. Workforce expectations, broader societal trends, and priorities of some activist investors continue to encourage visible commitments to DEI, even as regulators scrutinize those same initiatives for potential bias.
This creates a fundamentally complex operating environment, where actions designed to support inclusion may carry reputational benefits while simultaneously introducing regulatory and litigation risk.
Strengthening insurance programs and risk management practices
Whether a claim is framed as reverse discrimination, religious discrimination, or a more conventional allegation, it is still a discrimination claim at its core. As such, appropriately structured employment practices liability (EPL) insurance policies remain the chief form of risk transfer protection for employers, even as the legal and regulatory environment continues to evolve.
Importantly, the severity of EPL claims appears to be growing as regulators and enforcement agencies pursue and publicize large settlements with employers. Both the EEOC and Department of Justice continue to celebrate their sizable financial recoveries, in some cases reaching eight figures, as a way to demonstrate enforcement strength and deter noncompliance.
Insurers are responding accordingly. EPL underwriters now pay closer attention to practices that previously received less scrutiny. In addition to more heightened inquiries around DEI-related initiatives in general, underwriters are taking a closer look at ERGs and hiring or vendor practices. Employers can continue to support inclusive workplace cultures and employee well-being, but they must take a proactive, balanced approach to DEI. Among other actions, employers should also:
Stay informed about the legal and regulatory environment. Work with in-house and outside counsel to track changes at the federal level, including relevant court rulings and shifting agency priorities, as well as state and local laws that may impose additional or stricter requirements.
Assess current initiatives and align programs with evolving legal standards. This includes updating policies, training, and governance structures to ensure consistency and defensibility. Any necessary changes should be made with input from HR, legal, and risk management; collectively, these stakeholders can evaluate how workplace practices may be perceived under evolving enforcement frameworks.
Revisit insurance coverage. Evaluate whether your EPL insurance program is adequate for today’s evolving risk environment. Reassess limits, structure, and overall program design to ensure insurance policies align with potential claim severity and emerging regulatory enforcement trends. If your organization doesn’t already purchase EPL coverage, now may be the time to reconsider that choice.
Prepare for more underwriting scrutiny during renewals. As underwriters ask more detailed questions to assess potential exposures, be prepared to clearly explain your policies, governance, and decision-making processes. Transparency and risk management maturity can influence coverage terms, pricing, and capacity in a tightening underwriting environment.
Together, these steps can help employers not only reduce exposure but also demonstrate a thoughtful, well-documented approach to compliance in an increasingly complex regulatory environment. For more information, please visit Lockton’s EPL webpage here. (opens a new window)
