California Amends Privacy Laws Again: CCPA Health Information Amendment and Employee/B2B Exemption Signed into Law; Vetoes for Genetic Privacy and Social Media Parental Consent Bills
California’s Governor Gavin Newsom recently signed into law two bills to amend the California Consumer Privacy Act (“CCPA”). He also vetoed two other consumer privacy bills based on concerns about potential conflicts with existing state and federal law. Collectively, these four bills represented the most significant privacy legislation that came out of the California Legislature’s 2019-20 term, which came to a close on September 30th.
Only one of the two new CCPA amendments, AB713, includes substantive changes to the law. It streamlines the CCPA’s health information exception and imposes new obligations on CCPA businesses and others that handle deidentified patient information.
The other CCPA amendment, AB1281, simply extends the CCPA’s employee and B2B exemptions to January 1, 2022 if voters fail to pass Proposition 24 (CPRA or CCPA 2.0) in November. Those exemptions are currently set to expire on December 31st of this year.
Newsom also vetoed two consumer privacy bills despite expressing support for the goals of each. SB980 would have expanded consumer rights with respect to genetic information collected by direct-to-consumer genetic testing companies. Newsom’s veto was motivated by concerns that the law could have “unintended consequences” for the operation of the state’s communicable disease reporting requirements, including those applicable to COVID-19. The other bill, AB1138, would have imposed additional parental consent requirements on social media network operators. Newsom vetoed it to avoid potentially overlapping state and federal compliance obligations, citing parallels between the bill and federal regulations under the Children’s Online Privacy Protection Act (“COPPA”).
Here we outline the significant features of each of the new CCPA amendments.
An Early Recap of Privacy in 2020: A US Perspective
*This article was adapted from “Global Overview,” appearing in The Privacy, Data Protection and Cybersecurity Law Review (7th Ed. 2020)(Editor Alan Charles Raul), published by Law Business Research Ltd., and first published by the International Association of Privacy Professionals Privacy Perspectives series on September 28, 2020.
Privacy, like everything else in 2020, was dominated by the COVID-19 pandemic. Employers and governments have been required to consider privacy in adjusting workplace practices to account for who has a fever and other symptoms, who has traveled where, who has come into contact with whom, and what community members have tested positive or been exposed.
As a result of all this need for tracking and tracing, governments and citizens alike have recognized the inevitable trade-offs between exclusive focus on privacy versus exclusive focus on public health and safety.
Historic Charges: First Enforcement Action Filed by New York Department of Financial Services Under Cybersecurity Regulation
On July 21, 2020, the New York State Department of Financial Services (NYDFS or the Department) issued a statement of charges and notice of hearing (the Statement) against First American Title Insurance Company (First American) for violations of the Department’s Cybersecurity Requirements for Financial Services Companies, 23 N.Y.C.R.R. Part 500 (Cybersecurity Regulation or Regulation). The First American Statement of charges alleges six violations of the Cybersecurity Regulation and marks the Department’s first action pursuant to the Regulation, which is enforced by the recently created NYDFS Cybersecurity Division.1
NYDFS’s Statement seeks relief against First American, including civil monetary penalties and an order requiring First American to remediate any defined violations. Although the Statement does not include a calculation of the total penalty, the NYDFS explains that the civil monetary fines against First American are to be assessed pursuant to the Financial Services Law, which provides for a maximum civil monetary penalty of $1,000 per violation of the Regulation.2 Because First American’s violations included the exposure of millions of documents containing nonpublic information (NPI), the total penalty potentially could be substantial. The First American hearing is scheduled to occur on October 26, 2020, at the NYDFS.
The Return of the Mac: CCPA 2.0 Qualifies for California’s November 2020 Ballot and Could Usher In Sweeping Changes to CCPA
The California Privacy Rights Act (CPRA), a proposed initiative to codify far-reaching amendments to the California Consumer Privacy Act (CCPA) and sometimes referred to as “CCPA 2.0”, is back in play and heading to the November 2020 ballot. A series of dramatic procedural twists and turns culminated with initiative backers successfully obtaining a writ of mandate directing the Secretary of State to direct counties to verify signatures for the ballot proposal by the June 25th Constitutional deadline. This verification involved each county conducting a random sample of the more than 800,000 signatures that proponents had submitted to place the initiative on the ballot.
Before the California court’s ruling, observers were skeptical that signatures could be verified before the deadline. Initiative proponents were almost two weeks behind the recommended schedule when they delivered signatures to be verified by California’s 58 counties. This meant counties had until June 26th to verify signatures — a day after the June 25th Constitutional deadline. Experience with other initiatives this year had shown that several large counties were waiting until the deadline to complete verifications, so proponents petitioned the court to push the deadline up by a day in order to meet the Constitutional deadline. The court agreed to do so, finding good cause existed to force counties to complete verifications a day early. And, as it happened, the extra time was not needed, as counties finished the count two days ahead of their initial deadline.
CCPA Enforcement Date Rapidly Approaching: California Attorney General Proposes Regulations for Final Review With July 1, 2020 Less Than One Month Away
On June 1, 2020, California’s Office of the Attorney General (“AG”) moved one step closer to finalizing the California Consumer Privacy Act (“CCPA”) regulations when the AG submitted proposed final regulations for review and approval by California’s Office of Administrative Law (“OAL”). This submission signals the end of the AG’s CCPA regulation drafting process that began in early 2019. If the OAL approves the proposed final regulations, they will be finalized and enforceable by the AG, subject to any legal challenges.
In Midst of COVID-19 Pandemic, Senators Propose Privacy Bill Aimed At Businesses’ Use of Consumer Data
On April 30, 2020, four Republican Senators announced plans to introduce the COVID-19 Consumer Data Protection Act. The four Senators, John Thune (R-S.D), Roger Wicker (R-Miss.), Jerry Moran (R-Kan.), and Marsha Blackburn (R-Tenn.), are all Members of the Commerce Committee, with Wicker the Committee’s chair.
According to the April 30 Senate press release regarding the COVID-19 Consumer Data Protection Act, the legislation would “provide all Americans with more transparency, choice, and control over the collection and use of their personal health, geolocation, and proximity data” for data processing related to fighting the COVID-19 pandemic. The press release also states that the bill would “hold businesses accountable to consumers if they use personal data to fight the COVID-19 pandemic.” Under the bill, covered purposes include “(1) collecting, processing, or transferring the covered data of an individual to track the spread, signs, or symptoms of COVID-19; (2) collecting, processing, or transferring the covered data of an individual to measure compliance with social distancing guidelines or other requirements related to COVID-19 that are required by federal, state, or local government order; (3) collecting, processing, or transferring the covered data of an individual to conduct contact tracing for COVID-19 cases.” (more…)
Stay At Home Orders May Have Killed California’s Ballot Initiative to Expand CCPA [**Update – But Californians for Consumer Privacy Say Maybe Not**]
UPDATE: Soon after we published the post below, we learned that the sponsors of the California Privacy Rights Act (CPRA) – i.e., the ballot initiative that aimed to amend and significantly expand the California Consumer Privacy Act (CCPA) – intend to push forward with their attempt to get it on the ballot this year. On May 4th, the initiative’s sponsors, the Californians for Consumer Privacy, announced on Twitter they were submitting to counties across the state. Whether county election officials can verify the signatures in time to qualify for the November 2020 ballot remains to be seen. While conventional wisdom is that the recommended April deadline is an important one to make, the approval process may be different this year due to the COVID-19 pandemic and how it might affect the availability of resources to approve initiatives. We will continue to monitor this situation and provide updates on Data Matters as appropriate.
The California Privacy Rights Act (CPRA), the ballot initiative that aimed to amend and significantly expand the California Consumer Privacy Act (CCPA), including by creating the California’s very own data protection authority, the nation’s first, appears to be dead–at least for this ballot season.
A February 2020 Surprise: California Attorney General Proposes Significant Revisions to CCPA Regulations
Just as companies were starting to recover from their exertions to put in place California Consumer Privacy Act (“CCPA”) compliance programs before the law’s January 1, 2020 entry into force, the California Attorney General (“AG”) provided an early February surprise. CCPA watchers long expected that the AG would revise the CCPA regulations he initially proposed on October 10, 2019. But when the AG actually released his proposed regulations on February 7 – a proposal he subsequently modified slightly on February 10 – both the timing and breadth of the revisions were surprising. In short, the revisions were both sooner and more significant than expected.
California Department of Business Oversight December 2019 Actions
The California Department of Business Oversight (CDBO) recently concluded that the point of sale consumer financing programs offered by Sezzle, Inc., and another, unnamed party constituted making loans for purposes of the California Financing Law (CFL). A number of payment providers and technology companies have been developing innovative payment options, including consumer financing options, that are facilitated by advances in technology and mobile connectivity. Some market participants have structured their products such that a license should generally not be required under state law. The CDBO’s actions, however, may require companies to revisit that analysis and consider their licensing obligations.
Oregon Requires Vendors to Report Data Breaches
While much of the New Year attention has been focused on California due to the effective date of the California Consumer Privacy Act, a new Oregon law also went into effect on January 1, 2020 complicating compliance with data breach obligations. The law is unique among state data breach notification laws in that it imposes a direct obligation on vendors to provide regulatory notice to the state. It also requires vendors to provide notice to the data owner within 10 days. This new regulatory notice requirement may take some control away from data “owners” that typically manage (and often contractually demand sole control over) initial regulator communications with regard to incidents impacting their data. However, the new requirement may also incentivize service providers to take more responsibility for incident response.