The business community watched eagerly as the California legislature approached a
September 13 deadline for amending the California Consumer Privacy Act before it
takes effect on January 1, 2020. Many potential amendments were in play, including
some that would have made core changes to this major new privacy law. But the only
amendments to actually pass were at the margin: human resources files, mergers and
acquisition due diligence information concerning employees and officers, and business-to-business communications are now largely out of scope. These amendments generally
are business-friendly, but they are not game-changers.
Assuming these amendments are signed by California Governor Gavin Newsom, as is
expected, then the shape of the CCPA—and of corporate compliance obligations for the
time being—can now be seen with more certainty. Companies subject to the CCPA
should take into consideration how these amendments might affect their gap analyses
and implementation of any needed policies, procedures, and technical measures. The
amendments provide that certain business-friendly exceptions will sunset after a year
unless the legislature acts again. Stakeholders also continue to await crucial
implementing regulations from the California Attorney General. So it seems likely that
all eyes in the privacy community will remain on Sacramento for at least another year.
HUMAN RESOURCES DATA
Pre-amendment, a gray area under the CCPA was that employee data appeared to be in
scope under the statute’s plain words—even though protection of employees (as
opposed to consumers) did not seem to be the legislative purpose. We now have an
answer in black and white: For the year 2020, at least, HR data will be out of scope. The
amendments exempt personal information that is collected about a California resident
in their role as “a job applicant to, an employee of, owner of, director of, officer of,
medical staff member of, or contractor” of the covered business. The amendments also
exempt emergency contact information for employees as well as personal information
necessary for the covered business “to administer benefits” for the employee’s
dependents or beneficiaries.
Two caveats: (1) covered businesses must still disclose to employees (and to applicants, etc.), at or before the point of collection the categories of personal information they collect; and (2) this exemption does not apply to the CCPA’s private right of action for data breaches. Employees, like consumers, will be able to sue, and recover generous statutory damages, if their personal information is compromised.
We have previously suggested that, given the possibility this sort of amendment would
pass, businesses might reasonably put HR-related matters at the back of their CCPA
compliance queues. It is now clear that, subject to these limited caveats, HR matters can
be put out of queue altogether for at least a year. HR information comes back into scope
for 2022 and beyond unless the legislature acts again to extend the exemption.
BUSINESS-TO-BUSINESS COMMUNICATIONS AND DUE DILIGENCE INFORMATION
Also for a year, the amendments exempt from much of the CCPA personal information
“reflecting a written or verbal communication or a transaction between” a covered
business and a consumer who is acting “as an employee, owner, director, officer, or
contractor” of another company, where the covered business is engaged in “conducting
due diligence regarding, or providing or receiving a product or service” from the other
An acquirer that receives consumer-level data relating to the target’s employees and
officers as part of a proposed deal does not need to apply CCPA protocols to the data
room. Let’s say you are planning to acquire a software engineering firm, and in due
diligence you receive a roster of the target company’s employees, officers, and board of
directors. You do not need to give the individuals on that roster a CCPA privacy notice,
nor do you need to respond to their requests under the CCPA to access their data or to
delete their data.
These exemptions do not apply to the provisions concerning consumers’ right to opt
out of the sale of their data or the private right of action for data breaches.
For consumer reporting agencies, furnishers of consumer report information, and users
of consumer reports, activities regulated by the Fair Credit Reporting Act are exempt
from the CCPA. Like the exceptions noted above, the exception for consumer report
activities does not apply to the private right of action for data breaches.
DATA BROKER REGISTRATION
The amendments impose a new registration requirement on data brokers. Data brokers
are defined as those businesses that “collect and sell to third parties the personal
information of a consumer with whom the business does not have a direct relationship.”
The definition explicitly does not include consumer reporting agencies, financial
institutions, or insurance companies. Data brokers are required to register with the
Attorney General each year and provide their contact information. The Attorney
General is obligated to publish a website to make this information available to the public.
The intent of the amendment was to assist consumers in identifying businesses that
collect their information and provide them with contact details if the consumer wishes
to opt out of the sale of their personal information.
A narrow exception to the right to opt out of the sale of personal information was
created for vehicle information and ownership information shared between a motor
vehicle dealer and the vehicle’s manufacturer.
Businesses that operate “exclusively online” and have a “direct relationship with a
consumer” will no longer be required to provide consumers with a toll-free number to
submit data access requests—an email address alone is sufficient. Other covered entities
are obligated to provide at least two methods for consumers to submit data access
requests, including, at a minimum, a toll-free telephone number.
“REASONABLE” LIMITS ON PERSONAL INFORMATION
The amendments introduced clarifying changes to the definition of personal
information. First, the amendments create a reasonableness requirement with respect to
the definition of personal information: in order for information that does not directly
identify a consumer to be within scope, that information must “reasonably” be capable
of being associated with a consumer or household. This makes clear that an objective
standard will be applied—the mere possibility that information can be linked to an
individual is not enough. Second, the amendments make clear that personal
information “does not include deidentified or aggregate consumer information.” Third,
the amendments provide additional clarity as to what qualifies as “publicly available
information.” Publicly available information is exempt from the definition of personal
information and is “information lawfully made available from federal, state, or local
DATA BREACH NOTIFICATION EXPANDED
Related to, but separate from, the CCPA amendments, the legislature also passed a bill
that broadened the definition of personal information in the context of data breaches.
The definition now includes tax identification numbers, passport numbers, military
identification numbers, and other unique identification numbers issued on a
government document as well as biometric data.
BIGGER AND BOLDER AMENDMENTS FAILED
Amendments were considered, but not passed, that would have exempted personal
information collected “as part of loyalty, rewards, premium features, discounts or club
card programs” and personal information disclosed to third parties for the sole purpose
of detecting security incidents. An effort led by Google and others to carve out targeted
internet advertising did not make it through either. Earlier this year, a bill that was
supported by California’s Attorney General that would have broadened a consumer’s
private right of action was withdrawn. As a result, the private right of action applies to
data breaches but not to any missteps in day-to-day CCPA compliance. For example, a
failure to tag data as “do not sell” when a consumer so requests could draw enforcement
action from the California AG, but not from the plaintiffs’ bar.