United States: Fourth Quarter 2018 Workplace Privacy Update

Last Updated: September 19 2018
Article by Kwabena Appenteng

2018 has so far been a year that will long live in the memory of workplace privacy lawyers.  Over the past eight months, lawyers for multinational corporations have had to familiarize themselves with a range of new laws, including the European Union's General Data Protection Regulation (GDPR); the GDPR-styled California Consumer Privacy Act; and new data breach notification laws in South Dakota and Alabama.  As we enter the final few months of the year, additional privacy laws and developments sit on the horizon.  This article focuses on three more developments that privacy lawyers and employment counsels should be aware of heading into the final months of 2018.

1.  Colorado's Data Privacy Law (House Bill 18-1128)

Effective September 1, 2018, companies that operate in Colorado and store paper or electronic documents containing personal identifying information will be required to comply with heightened data protection obligations.  The new requirements stem from House Bill 18-1128 (the "Bill"), which was signed into law by Colorado Governor John Hickenlooper on May 29, 2018, and amends the Colorado Consumer Protection Act (C.R.S.A. § 6-1-101 et seq).  Although the Bill was captioned "Concerning Strengthening Protections for Consumer Data Privacy," it defines a "covered entity" as a corporation, business or other legal or commercial entity that, in the course of its business, "maintains, owns, or licenses personal identifying information."  Colorado employers will therefore be required to comply with the Bill's requirements.       

The Bill introduces three new data protection requirements:

  1. Paper & Electronic Document Destruction Schedule:  Employers that are not regulated by state or federal law must maintain a written destruction schedule for paper and electronic documents that contain personal identifying information and are "no longer needed."  Personal identifying information is defined to include a Social Security number, driver's license number, military identification number, personal identification number (such as for a financial account), and employer identification number. ​
  2. Establish Data Security Procedures:  Employers must "implement and maintain reasonable security procedures and practices that are appropriate to the nature of the personal identifying information and the nature and size of the business and its operations."  The Bill does not provide minimum standards that the security procedures must satisfy, but the language in the Bill makes clear that the legislature does expect employers to tailor their security programs to their business.
  3. Vendor Contracting:  Employers must require third-party service providers that store or process employees' personal identifying information to "implement and maintain reasonable security procedures."  The Bill does not require employers to enter into contractual agreements with service providers documenting these security procedures in the way that the GDPR and the Health Insurance Portability and Accountability Act (HIPAA) do.  Nevertheless, depending on the reputation and size of the service provider, and the employer's access to information about the service provider's security safeguards, employers may wish to obtain the protection of a contractual agreement.

The Bill also amends Colorado's security breach notification law.  These amendments are significant for any business that maintains the personal information of Colorado residents, even if the business is not located in Colorado, because it has become customary for organizations to comply with the laws of each state where affected individuals reside when responding to a security breach.  The key amendments for employers are as follows:

  • Addition of Medical Information, Biometric Data, and Health Insurance Identification Number to the Definition of "Personal Information":  Among others, the Bill adds each of these categories of information to those that, if affected by a breach, will trigger a notification requirement ("trigger data").  Significant to employers, biometric data is defined as that which is used when an individual "accesses an online account."  As a result, the Bill does not cover biometric data that may be stored on an employer's or a service provider's servers in connection with a biometric timeclock or access device.
  • Thirty-Day Notification Requirement:  Employers that suffer a data breach are now required to notify Colorado residents of the breach within 30 days of the date on which the employer determines the breach occurred.  Companies do not need to notify Colorado residents of a breach if the employer's investigation determines that a "misuse of information" about a Colorado resident "has not occurred and is not reasonably likely to occur."
  • Content of Notification:  Employers that suffer a breach are now required to deliver to affected Colorado residents a notice that states: the date of the breach; a description of the trigger data involved in the breach; contact information the Colorado resident can use to obtain more information about the breach; the toll-free numbers and websites for consumer reporting agencies and the Federal Trade Commission (FTC); and a statement that the Colorado resident can obtain information from the FTC and credit reporting agencies about fraud alerts and security freezes.
  • Attorney General Notification Requirement:  Employers that suffer a breach that affects at least 500 Colorado residents must now notify the Colorado Attorney General of the breach.  An employer is not required to notify the Colorado Attorney General if the company's investigation determines that misuse of the breached data has not occurred and is not reasonably likely to occur.

2.  New Wave of Biometric Privacy Class Actions

The avalanche of class action lawsuits filed under the Illinois Biometric Privacy Act ("BIPA") over the past year has forced employers to pay attention to this once ignored law.  Until recently, the lawsuits involving employers were predicated on the employers implementing biometric timeclocks without first satisfying BIPA's notice and consent requirements.  The rash of filings came to an end when, on December 21, 2017, the Illinois Appellate Court ruled in Rosenbach v. Six Flags Entertainment Corp., No. 2-17-0317, 2017 IL App (2d) 170317), that this is insufficient to maintain a claim under BIPA.  Unfortunately for employers, recent developments could lead to a new wave of BIPA class actions.

On May 31, 2018, an Illinois federal judge ruled in Dixon v. Washington and Jane Smith Community, No. 17C8033, 2018 WL 244592 (N.D. Ill. May 31, 2018), that a plaintiff's allegation that her employer failed to inform her that her biometric data would be disclosed to the provider of the biometric timekeeping system was enough to maintain an action under BIPA.  The court explained that this allegation distinguished the plaintiff's case from those alleging a mere violation of BIPA's notice and consent provisions, as "obtaining or disclosing a person's biometric identifiers or information without her consent or knowledge necessarily violates that person's right to privacy in her biometric information."  Unfortunately for employers, the court's ruling has already been recognized by other Illinois federal courts and seized upon by plaintiff's lawyers; since the ruling at least 20 class actions have been filed alleging that employers violated BIPA by failing to notify employees that their biometric data is being disclosed to the provider of the biometric timekeeping system.  However, the court's ruling in Dixon should be questioned because the disclosure of biometric data in that case was to a service provider subject to contractual limitations on its use and further disclosure of the biometric data, and not to a non-agent third party that could use the biometric for its own purposes.

And more class actions may follow.  On May 30, 2018, the Illinois Supreme Court agreed to accept the appeal of the Illinois Appellate Court's ruling in Rosenbach.  The Illinois Supreme Court will decide whether to plead a claim under BIPA an individual needs to allege more than that their biometric data was collected without notice and consent.  If the Illinois Supreme Court were to rule that a failure to obtain notice and consent is enough to allege a violation of BIPA, employers could see a lot more BIPA class actions being filed.  

3.  Ohio's New "Legal Safe Harbor" For Companies Subject To Tort-Related Litigation Stemming From A Data Breach

From November 2, 2018, employers that maintain a "cybersecurity program" and suffer a data breach involving the Personal Information (defined below) of Ohio residents will be able to avail themselves of a new "safe harbor," intended to provide an affirmative defense to any tort action stemming from the breach.  The safe harbor was included within Ohio Senate Bill 220 ("Bill 220"), which was signed into law by Ohio Governor John Kasich on August 3, 2018. 

To be eligible for the safe harbor, an employer must implement a written cybersecurity program that conforms to an "industry recognized cybersecurity framework" and is designed to do all of the following:

  1. Protect the security and confidentiality of all electronically stored records that contain an employee's social security number, driver's license number, state identification card number, account number or credit or debit card number in combination with any required security code, access code, or password, or any records that contain any of this information in combination with an employee's first name or first initial and last name ("Personal Information");
  2. Protect against any anticipated threats or hazards to the security or integrity of the information; and
  3. Protect against unauthorized access to and acquisition of the information that is likely to result in the employee being exposed to a material risk of identity theft or other fraud.

A cybersecurity program will be deemed to satisfy industry standards if it conforms to the current version, or a combination, of any of the following publically available frameworks:

  1. The cybersecurity program reasonably conforms to National Institute of Standards and Technology's (NIST) Framework for Improving Critical Infrastructure Cybersecurity;
  2. NIST special publication 800-171;
  3. NIST special publications 800-53 and 800-53a;
  4. The Federal Risk and Authorization Management Program (Fed RAMP) Security Assessment Framework;
  5. The Center for Internet Security Critical Controls for Effective Cyber Defense;
  6. The International Organization for Standardization/International Electro technical Commission 27000 Family – Information Security Management Systems;

Employers that are regulated by HIPAA, The Health Information Technology for Economic and Clinical Health Act (HITECH), the Gramm-Leach Bliley Act, or Federal Information Security Modernization Act of 2014, or the PCI Data Security Standard must conform their cybersecurity programs to the security requirements in those laws.  If any of these framework documents are revised, an employer has one year from the date of publication of the revised framework document to update its cybersecurity program.

Until the safe harbor is tested in litigation, the strength of this new affirmative defense remains to be seen.  For now, however, the safe harbor presents employers with an ostensible incentive to reevaluate their information security policies in advance of the November 2 effective date.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions