As the importance of protecting personal information continues to gain attention in state legislatures, companies across a variety of sectors face a complex landscape of data privacy regulations. With the growing emphasis on privacy rights, several U.S. states have introduced or updated data protection laws, marking a major shift in how businesses handle consumer data. Already in April, two new states joined the list of states enacting consumer data privacy laws.
Currently, 16 states have enacted data privacy laws, including California, Colorado, Connecticut, Delaware, Indiana, Iowa, Kentucky, Maryland, Montana, New Hampshire, New Jersey, Oregon, Tennessee, Texas, Utah, and Virginia. Additionally, many states are developing their own legislation. Although specific requirements vary by state, there is significant overlap in what businesses need to do to comply with these regulations. Therefore, companies would be wise to proactively prepare for potential expansion into these markets.
Here's a quick breakdown of what businesses need to consider when it comes to data privacy.
- Comprehensive privacy policy: All companies should have a detailed privacy policy that outlines the type of data that will be collected and the purposes for which it will be used. This is now a basic requirement for businesses collecting customer information.
- Data processing agreement: Companies acting as data controllers and collaborating with third parties must establish agreements to ensure that these parties comply with specified data management protocols.
- Implementing data security measures: It is essential for businesses to establish a robust framework to protect the data they collect and ensure it is protected from unauthorized access and breaches.
- Data protection assessment: Many states require companies to conduct comprehensive assessments related to the personal data they collect. These assessments typically include an evaluation of project objectives, data processing needs, privacy risks, and mitigation strategies.
- Opt-in consent for sensitive data: Most states require companies to obtain explicit consent from customers before collecting sensitive data. The definition of sensitive data varies by state, but generally includes information related to race, health, sexual orientation, etc.
- Data minimization: Nearly all states require businesses to limit the collection and retention of personal data to that necessary for a specific purpose. This ensures that only relevant information is processed and retained for as long as necessary.
- Obligation to avoid secondary use: Data controllers are prohibited from processing personal data for purposes unrelated to the specified purpose without obtaining the consumer's consent.
In light of these evolving regulations, business owners and business owners need to take proactive steps such as:
- Review our current privacy policy. Ensure consistency between existing privacy policies and actual data processing practices.
- Legal compliance check: Contact a legal expert experienced in data privacy law to review your privacy policy and ensure compliance with state regulations.
- Assignment of responsibility: Appoint an internal person to oversee data privacy compliance and meeting consumer demands.
- Test response steps: Conduct tests to assess a company's ability to respond effectively to consumer demands and determine whether it is prepared to address privacy concerns.
Many have been waiting to see if the U.S. federal government would take action that would end the patchwork of individual state laws regarding consumer data privacy, at least for the foreseeable future. is not expected to be taken. Until federal standards are enacted, business owners are encouraged to stay informed and take proactive steps to comply with data privacy laws. Failure to maintain compliance increases a company's risk of litigation and government regulatory scrutiny.
This blog was drafted by jack amaral and John Farnsworth, a technology and privacy attorney at Spencer Fehn in Minneapolis, Minnesota. For more information, visit spencerfane.com.
