Some business leaders and HR professionals may be waking up this morning not realizing they must provide a “Notice at Collection” to some or all of their employees and applicants under the new California Consumer Privacy Act (CCPA). This is not surprising given the confusion during 2019 about whether this law would reach that far. The passage of AB 25 confirmed that while employees would be temporarily excluded from most of the CCPA’s protections, two areas of compliance remain: (i) providing a notice at collection, and (ii) maintaining reasonable safeguards for personal information driven by a private right of action now permissible for individuals affected by a data breach caused by a business’s failure to do so.
Before addressing these two employment-related aspects of the CCPA, it is helpful to remember which entities are subject to CCPA. The basic rule follows.
In general, the CCPA applies to a “business” that:
A. does business in the State of California,
B. collects personal information (or on behalf of which such information is collected),
C. alone or jointly with others determines the purposes or means of processing of that data, and
D. satisfies one or more of the following: (i) annual gross revenue in excess of $25 million, (ii) alone or in combination, annually buys, receives for the business’s commercial purposes, sells, or shares for commercial purposes, alone or in combination, the personal information of 50,000 or more consumers, households, or devices, or (iii) derives 50 percent or more of its annual revenues from selling consumers’ personal information.
For more information on this part of the law, please review Does the CCPA Apply to Your Business?
Notice at Collection
A “notice at collection” requires two pieces of information be communicated to the consumer/employee:
The categories of personal information collected by the business. There are eleven categories of personal information, such as identifiers, geolocation data, biometric information, employment-related information, etc. See Cal. Civ. Code Sec. 1798.140(o).
For each category, the uses of personal information by the business.
There are, of course, some questions employers may have about this notice, such as:
Who must get it? AB 25 refers to the following categories of “consumers” (natural persons who are California residents) – job applicants to, employees of, owners of, directors of, officers of, medical staff members of, or contractors of the business. Note, the CCPA does not define these terms, and recent proposed regulations do not address AB 25 at all. Guidance may come with final regulations.
When must they get it? The statute requires the notice to be provided at or before collection of personal information. In the case of applicants, that might mean providing the notice on the company’s website if, for example, it receives information from applicants on the site concerning open positions. In the case of employees, assuming different notices will be provided because more information is collected from employees, a notice at the beginning of the onboarding process, such as with offer letters, might make sense. Some employers may want to include the notice in employee handbooks, although this may not satisfy the “at or before collection” requirement. Handbooks typically are not provided until after some personal information has been collection from an employee, but it could provide employees a place for easy reference to the business’s practices concerning personal information.
Is notice required for current employees? It is true that businesses have already collected personal information about individuals working for the company prior to 2020. However, collection is an ongoing process. One of the categories of personal information, for example, is website browsing activity. Many businesses now continually track this activity if only to safeguard their systems and implement electronic communications and information systems policies.
Include information on where employees can go with questions? This is not currently required. Providing employees, applicants, others a place to go with questions, however, might be a good idea. Employees may have not received this kind of notice before and may have a number of questions. Designating individuals in the organization to address those questions, and directing employees and applicants to those individuals, would help to ensure consistent messaging about the business’s practices.
The second issue for employers under the CCPA is safeguarding employee personal information. Under the CCPA, California consumers, including employees and applicants, affected by a data breach can bring an action for statutory damages when the breach is caused by the business’s failure to maintain reasonable safeguards to protect a subset of personal information and following a 30-day cure period. A consumer can recover damages in an amount not less than $100 and not greater than $750 per incident or actual damages, whichever is greater, as well as injunctive or declaratory relief and any other relief the court deems proper.
There is no regulatory guidance in California concerning what it means to have “reasonable safeguards.” However, former California Attorney General Kamala Harris issued a 2016 data breach report in which she interpreted an existing California statute, Cal. Civ. Code 1789.81.5(b), to mean that businesses must at least satisfy the 20 controls in the Center for Internet Security’s Critical Security Controls in order to be considered reasonable. It is not clear if those controls will be sufficient to meet the CCPA’s standard, but they would be a good place to look for guidance. Note also that the “reasonably safeguard” obligation applies to a subset of personal information, namely:
An individual’s first name or first initial and his or her last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted or redacted:
Social security number,
Driver’s license number, California identification card number, and government identifiers (i.e. tax identification number, passport number, military identification number),
Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual’s financial account,
Health insurance information, and
Thus, businesses should be reviewing their data security policies and procedures not just with respect to consumer data, but also employment-related activities – payroll, benefits, recruiting, direct deposit, shared-services, background checks, etc. This also means evaluating what their third-party service providers are doing to protect personal information of employees, applicants, contractors, etc. Note other states also have similar mandates, including Colorado, Massachusetts and New York (coming soon in March 2020).
Businesses that find themselves subject to the CCPA should act quickly to satisfy their AB 25 requirements. Of course, this may be temporary because AB 25 sunsets on January 1, 2021. However, considering the current direction of privacy law, it seems likely that there will be more and not less privacy protections for employees by the end of 2020.