June 29, 2022

Volume XII, Number 180

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Congress Releases Draft Federal Privacy Law with Potential Traction To Pass

The federal government has been trying to reach a consensus on data privacy and thus far has failed to pass legislation. On June 3, 2022, a bipartisan draft bill, titled the American Data Privacy and Protection Act was released by the Committee on Energy and Commerce. The bill intends to provide comprehensive data privacy legislation, including the development of a uniform, national data privacy framework and robust set of consumer privacy rights.

A covered entity for purposes of the draft bill is defined as “any entity or person that collects, processes, or transfers covered data” and is subject to the Federal Trade Commission Act, is a common carrier under the Communications Act of 1934, or is an organization not organized to carry on business for their own profit or that of their members.

Per the draft, the new act would be carried out by a new bureau within the Federal Trade Commission (FTC). Interestingly, the proposed legislation would preempt similar state laws, though excludes the CCPA/CPRA in California and the BIPA and the GIPA in Illinois from that preemption.

The draft bill covers a wide swath of data consumer privacy issues from data collection to civil rights and algorithms. The following are some highlights of note:

Data Collection Requirements

The draft legislation imposes a duty on all covered entities not to unnecessarily collect or use covered data with covered data being defined broadly as “information that identifies or is linked or reasonably linkable to an individual or a device that identifies or is linked or reasonably linkable to 1 or more individuals, including derived data and unique identifiers”.  The FTC would be charged with issuing additional guidance regarding what is reasonably necessary, proportionate, and limited for purposes of collecting data.

Covered entities would have a duty to implement reasonable policies, practices, and procedures for collecting processing, and transferring covered data. Further, covered entities would be required to provide individuals with privacy policies detailing data processing, transfer, and security activities in a readily available and understandable manner. The policies would need to include contact information, the affiliates of the covered entity that it transfers covered data to, and the purposes of each category of covered data the entitled collects, processes, and transfers.

Covered entities would be prohibited from conditioning or effectively conditioning the provision or termination of services or products to individuals by having individuals waive any privacy rights established under the law.

There would be additional executive responsibility for large data holders, including requiring CEOs and privacy officers to annually certify that their company maintains reasonable internal controls and reporting structures for compliance with the statute.

Individual Rights Created

Individuals would be granted the right to access, correct, delete, and portability of, covered data that pertains to them. These are similar to many of the rights California residents have under the CCPA/CPRA.  The right of access would include obtaining covered data in a human-readable and downloadable format that individuals can understand without expertise, the names of any other entities the data was transferred to, the categories of sources used to collect any covered data and the purposes for transferring the data.

Sensitive covered data, which includes items such as an individual’s health diagnosis, financial account information, biometric information, and government identifiers such as social security information, among other items, is prohibited from data collection without the individual’s affirmative consent.

Civil Rights and Algorithms

Unsurprisingly, algorithms, which were recently addressed by the EEOC and DOJ in guidance are also addressed in this draft legislation. Under the proposed legislation, covered entities may not collect, process, or transfer data in a manner that discriminates based on race, color, religion, national origin, gender, sexual orientation, or disability. This section of the law would require those large data holders that use algorithms to assess their algorithms annually and submit annual impact assessments to the FTC.

Jackson Lewis P.C. © 2022National Law Review, Volume XII, Number 172
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About this Author

Jason C. Gavejian, Employment Attorney, Jackson Lewis, Principal, Restrictive Covenants Lawyer
Principal

Jason C. Gavejian is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. and a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals.

Mr. Gavejian represents management exclusively in all aspects of employment litigation, including restrictive covenants, class-actions, harassment, retaliation, discrimination and wage and hour claims in both federal and state courts. Additionally, Mr. Gavejian regularly appears before administrative agencies,...

(973) 538-6890
Principal

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm's Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and...

973- 538-6890
Cecilie E. Read KM Attorney Los Angeles
KM Attorney

Cecilie E. Read is the Knowledge Management (“KM”) Attorney for Jackson Lewis P.C.’s California Advice and Counsel Resource Group, and is based in the Los Angeles, California, office of Jackson Lewis P.C. She uses her expansive understanding of the complexities of California employment law to ensure all Jackson Lewis attorneys are consistently ahead of the curve and working efficiently to serve clients.

Prior to joining Jackson Lewis, Ms. Read defended employers in a wide range of industries in employment claims from single-plaintiff harassment claims to wage...

213-689-0404
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