Lurking In The Shadows – How The California Consumer Privacy Act May Affect Your Business
Unless you have been paying attention to data privacy news, you may not realize that January 1, 2020, is the implementation date of the California Consumer Protection Act (CCPA) and that July 1, 2020, is the current deadline for the California Attorney General to implement regulations under CCPA.
The CCPA constitutes an expansion beyond California’s existing privacy laws and various provisions of the new law will apply to all businesses, including businesses based in Nebraska and Iowa, that do business in California AND:
- Have annual gross revenue greater than $25 million (not just in California), or
- Obtain or share for commercial purposes the personal information of 50,000 or more California residents, households or devices, or
- Get 50% or more of their revenue from selling or sharing the personal information of California residents.
Many non-California based businesses may be surprised to learn that they fall within the scope of the CCPA. As currently drafted, the CCPA directs the California Attorney General to forego bringing any enforcement action under the CCPA until six months after publication of such final regulations, or July 1, 2020, whichever is sooner.
The CCPA was passed quickly to avoid a similar voter initiative ballot measure, and as a result has numerous ambiguities and apparent inconsistencies. The law was amended on September 23, 2018, and it is very likely that the law will be changed again by amendment, and clarified through final rules and regulations, before it comes into effect on January 1, 2020.
Note that at this point, the application of the CCPA to employee data remains an open question. On its face, the CCPA appears to apply only to California “consumers.” However, the CCPA’s definition of consumer (a California resident) combined with California’s longstanding practice of protecting individual privacy rights, suggests that the CCPA also may extend to the personal information of California residents maintained as part of an employment relationship. If so, the CCPA would apply to residents of California who are job applicants, full or part time employees, temporary workers, interns, volunteers, independent contractors, and even such persons’ dependents or beneficiaries.
While the CCPA will almost certainly change again before it comes into effect on January 1, 2020, businesses may want to begin thinking now about some of the core new provisions in that law, in particular, how the business will respond to consumers’ requests for information about their personal information held by the business and such consumers’ requests to delete their personal information held by the business. Note that as presently drafted, the CCPA requires businesses to maintain a twelve (12) month look back (as early as back to January 1, 2019) of data processing activities relating to covered personal information.
Also worth watching is the law’s treatment of private rights of action. While the CCPA does not contain a private right of action for violation of any of the new disclosure or individual rights provisions, it does provide a private right of action for California consumers whose information has been compromised in a data breach resulting from inadequate security measures. This essentially codifies the concept of negligence in California data breaches and, by imposing statutory damages ($100-$750 per consumer per incident), may largely affect the pleading and proof of damages in data breach cases, which is often the issue of greatest dispute. From a litigation standpoint, these statutory damages plus the broad definition of “consumer” means that plaintiffs’ attorneys may be gearing up to use the CCPA to bring cases against businesses that do business in California on behalf of a myriad of different groups about whom businesses typically hold personal information including, for example, end use customers, employees, shareholders and service providers, and vendors.
If you have questions or would like to discuss the CCPA’s application to your business, please contact the author.