California businesses, including employers, that have not already complied with their statutory data privacy obligations under the California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights Act (CPRA), including as to employee and job applicant personal information, should be taking all necessary steps to do so. See No More Exceptions: What to Do When the California Privacy Exemptions for Employee, Applicant and B2B Data Expire on January 1, 2023. As background, a covered business is one that “does business” in California, and either has annual gross revenues of $25 million, annually buys sells or shares personal information of 100,00 consumers or households, or derives 50 percent or more of its annual revenues from selling or sharing consumers’ personal information. It also applies, in certain circumstances, to entities that control or are controlled by a covered business or joint ventures. Covered businesses may be exempt from obligations under certain enumerated entity-level or information-level carve-outs.
On July 14, 2023, during a public meeting the CPPA introduced its new Deputy Director of Enforcement, Michael Macko, who laid out the CPPA’s intention to vigorously enforce the CCPA and CPRA. Macko outlined three enforcement priorities: (1) privacy notices and policies, to ensure compliance with the law’s requirements and their own practices; (2) the right to delete, including how businesses comply with that right; and (3) the implementation of consumer requests, such as requests to opt-out of a business’ sale or sharing of personal information, and whether businesses are introducing barriers to interfere with consumer statutory rights. At the meeting, the CPPA also announced that a new online consumer complaint form was available for complaints under the CCPA/CPRA.
Macko directly addressed the proverbial “elephant in the room”—a recent Sacramento Superior Court decision enjoining enforcement of the CPRA regulations until March 29, 2024. Macko stated that, while the decision impacted “some” regulations, “there is no vacation here from enforcement,” because the decision does not stop the CPPA’s enforcement division from enforcing the CCPA, the CPRA, or the earlier regulations issued under the CCPA. Macko stated that the CPRA regulations that were affected by the decision are just one of the CPRA enforcement tools. Indeed, while some of the temporarily enjoined CPRA regulations may create additive requirements not directly enumerated in the statute (such as requirements around opt-out preference signals (e.g., Global Privacy Controls) for sale or sharing of personal information and the multi-factor analysis for assessing the appropriateness of the collection and use of personal information) many of the CPRA regulations are instead intended to simplify compliance with the CPRA provisions as authorized in the CPRA. Thus, as Macko addressed in the recent meeting, there are existing compliance obligations that derive directly from the statutory provisions.
As a reminder of the California Attorney General’s concurrent enforcement authority under the CPRA, on the same day as the CPPA’s public meeting, California Attorney General Rob Bonta announced that his office recently sent inquiries to several large California employers concerning their companies’ compliance with the CCPA/CPRA. The announcement emphasized that “covered businesses must also comply with the CCPA’s robust privacy protections as it relates to employee data. Businesses subject to the CCPA have specific legal obligations, such as providing notice of privacy practices and fulfilling consumer requests to exercise their rights to access, delete, and opt out of the sale and sharing of personal information.” The California Attorney General has been active in enforcing the CCPA, although the recent public focus on employment-related enforcement is a new direction.
In light of these developments, even with the temporary absence of enforcement of the recent CPRA regulations until next year, covered businesses need to comply with their specific statutory obligations, such as providing notice of privacy practices and fulfilling consumer requests to exercise their rights to access, delete, correct, and opt out of the sale and sharing of personal information, and limit the use of their sensitive personal information. Businesses also have statutory obligations related to “backend compliance,” including updating agreements with service providers, contractors, and third parties, to ensure the appropriate contract terms are in place. In addition, businesses should assess their record keeping, and data retention and minimization policies in light of their statutory obligations. See Businesses Should Begin Assessing Their Data Practices In Order to Meet the California Privacy Rights Act Requirements.
Significantly, on the horizon, the CPPA will also be issuing regulations concerning cybersecurity audits, automated decision making tools (ADMT), and risk assessments. While the Sacramento Superior Court injunction reinforces that any new regulations can only be effective at least one year after they are issued, business should assess their cyber security systems and processes in the meantime, to ensure that they are satisfying the statutory cybersecurity mandates that more broadly reach any personal information. See Complying with Enhanced Cybersecurity Safeguards in California.
These recent developments following the Superior Court’s injunction are intended to serve as a reminder that CCPA/CPRA compliance obligations and enforcement of those obligations should be a priority for all covered business that collect and process personal information, including the personal data of employees. For questions concerning how to implement any of these measures or for assistance in standing-up a CCPA/CPRA compliance program, contact Brian Cesaratto, Alexander Franchilli, Frances Green, or the EBG attorney who assists you.
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