Recent developments in privacy law and a rise in class action lawsuits related to data collection offer a cautionary tale about understanding legal and ethical boundaries of monitoring “on-the-clock” employee conduct. With a hodgepodge of federal, state, and local legislation governing employee privacy rights, employers are often left to navigate a complicated legal landscape while balancing the practical need to understand how employees are using company information and equipment.  Employers, for example, have a legitimate interest in protecting company trade secrets, detecting unlawful transmission of unlicensed material, and improving work productivity.  Employees, on the other hand, may have a reasonable expectation of privacy in certain contexts while at work.

This quandary begs the question, where do employers draw the line? Continue Reading Workplace Monitoring: Where Do Employers Draw The Line?

The General Data Protection Regulation (GDPR) imposes strict obligations upon organizations that process the “personal data” of European individuals. Failure to comply with GDPR can result in large fines. The UK’s Information Commissioner’s Office (ICO), in recent months, issued a number of fines of £500,000 on global businesses with household names, and such fines have generated a lot of publicity. Many onlookers would be shocked by the magnitude of those fines but may not have appreciated that they were imposed under the Data Protection Act 1998, which was in force when the offending breaches occurred. Had the breaches taken place after May 25th of this year, when the GDPR took effect, those fines would more than likely have been significantly higher.

Businesses have therefore invested significant resources and money to make sure that they do not fall foul of the obligations imposed by the GDPR. Yet, within less than a year of the GDPR becoming binding law, those same businesses face further disruption as Brexit looms. Continue Reading Implications of Brexit on GDPR

On November, 2, 2018, Ohio’s recently passed Data Protection Act (Act) officially became law. The Act provides a possible affirmative defense to businesses in lawsuits where the plaintiff alleges a tort based on a business’ failure to implement a cybersecurity framework.

Importantly, the new law does not create a minimum cybersecurity standard in Ohio or new cybersecurity regulations that businesses must follow. Rather, the law operates by incentivizing businesses to develop and maintain a cybersecurity program that “reasonably conforms” to an already existing, industry recognized cybersecurity framework. If the company can prove that it had a compliant cybersecurity program in place at the time of a breach, the company can use the program’s existence as an affirmative defense to certain tort claims. Continue Reading New Cybersecurity Law Offers Safe Harbor Against Tort Claims

In August, the Federal Trade Commission (FTC) approved changes to a video game industry program in an effort to ensure compliance with the Children’s Online Privacy Protection Act (COPPA). This comes after a 2017 study finding that YouTube, the video platform owned by Google, is the most popular online media platform among children, with as many as 80% of children ages 6-12 using it daily. Yet YouTube claims in its Terms of Service that the platform is not intended for anyone under the age of 13, and by agreeing to the terms, consumers affirm that they are indeed at least 13 years old. Users also agree to Google’s privacy policy, which details how Google collects data such as a viewer’s device, location, or phone number, and tailors advertisements and services based on that data.

Continue Reading FTC Under Pressure from Congress to Investigate Violations of Child Privacy Laws

Beginning in 2020, California residents will have the right to opt out of the sale of their personal information under the California Consumer Privacy Act of 2018 (CaCPA or also called CCPA). It is time to revisit your third-party service provider agreements.  Companies now have two reasons to ensure that service provider agreements restrict the use or sale of personal information: to comply with CaCPA and to reduce risk of an FTC enforcement action. Continue Reading Preparing for 2020: Check In On Your Vendors

As a part of National Cybersecurity Month, last week the Federal Trade Commission (FTC) launched a campaign to help educate and assist small businesses with cybersecurity.  In conjunction with the Department of Homeland Security (DHS), the National Institute of Standards and Technology (NIST), and the Small Business Administration (SBA), the FTC has published a collection of materials for small businesses about cybersecurity. These materials include information about the following:

  • Cybersecurity Basics;
  • Understanding the NIST Cybersecurity Framework;
  • Physical Security;
  • Ransomware;
  • Phishing;
  • Business Email Imposters;
  • Tech Support Scams;
  • Vendor Security;
  • Cyber Insurance;
  • Email Authentication;
  • Hiring a Web Host; and
  • Secure Remote Access.

Additional information about the cybersecurity campaign and access to the materials can be found here.

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On October 16, 2018, the Securities and Exchange Commission (SEC) issued a report on the results of investigations made by the SEC’s Division of Enforcement into nine public companies that were victims of cyber-related frauds.  In each case, the SEC investigation focused on whether the target companies had complied with the applicable requirements of the Securities Exchange Act of 1934, as amended (Act). The Act requires public companies to devise and maintain a system of internal control over financial reporting designed to provide reasonable assurance that, among other things, transactions are executed in accordance with company management’s authorization, that transactions are properly recorded and that access to assets is permitted only with management’s authorization.

Ultimately, the SEC did not pursue enforcement actions against any of these companies, but released the report to advise public companies that cyber-fraud incidents must be taken into account when designing and maintaining internal control procedures. Continue Reading SEC Report Reiterates Cybersecurity Implications for Internal Control Requirement

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Effective October 1, 2018, Connecticut has the most stringent requirement—24 months—for free mitigation services that must be provided to those affected by a data breach of personally identifiable information (in the case of Connecticut: (A) Social Security number; (B) driver’s license number or state identification card number; (C) credit or debit card number; or (D) financial account number in combination with any required security code, access code or password that would permit access to such financial account).

With a new high-water set, it is likely that other states will quickly follow suit.  In the meantime, for entities that are responding to a multi-state data breach that includes Connecticut, there will now be a business decision of whether or not to offer 24 months of services to all affected individuals regardless of state law requirements (some of which are silent and the rest of which require 12 months of services).

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CA IoT Cybersecurity Bill Heads To Governor’s Desk
The bill (SB-327), if signed by Gov. Brown, will take effect on January 1, 2020. It is aimed at securing connected devices. The bill states that, “a manufacturer of a connected device shall equip the device with a reasonable security feature or features.”

House Approves Financial Sector Data Breach Bill
On Sept. 13 the House Financial Services Committee approved bill (H.R. 6743) to create a national data breach notification standard for the financial sector. The bill would amend the GLBA and preempt state law for institutions covered under the financial services law.

Department of Commerce Launches Collaborative Privacy Framework Effort
NIST announced it has launched a collaborative project to develop a voluntary privacy framework to help organizations manage risk. NIST will hold a public workshop on Oct. 16, 2018, in Austin, Texas—in conjunction with the International Association of Privacy Professionals’ Privacy. Security. Risk. 2018.

Upcoming Events:

McGuireWoods HIPAA Webinar Series: September 24, 2018 
This webinar will examine the application of HIPAA to the ever-growing array of mobile health applications and devices, with an emphasis on the design and security implications of such devices.

NIST has published Special Publication (SP) 1800-5, “IT Asset Management” to help financial service companies monitor and manage IT assets.  According to the release:

“The example solution…gives companies the ability to track, manage, and report on information assets throughout their entire life cycle. This can ultimately increase cybersecurity resilience by enhancing the visibility of assets, identifying vulnerable assets, enabling faster response to security alerts, revealing which applications are actually being used, and reducing help desk response times.”

A copy of the SP can be found here.