Check out the latest Compliance News Flash with blurbs about:

  • The Justice Department’s recent settlement with the country’s largest egg producer related to violations of the anti-discrimination laws during the employment eligibility verification process.
  • A new requirement on consumer reporting agencies to provide specific language to a consumer requesting a file disclosure under the Fair Credit Reporting Act.
  • California legal protections for employees who seek to change their name and/or social security number after they legalize their immigration status.
  • Processors and Privacy Shield.
  • Brazil’s new data protection law.

Click here to read the Compliance News Flash.

Human Resources professionals have one more item to add to their compliance checklist – ensuring the lawful transfer of employee, consumer or customer personal data from the European Union (“EU”) to the United States. 

To unravel this compliance requirement let’s start with a hypothetical transfer of personal data from location A to location B for employment purposes.  Company based in Providence, Rhode Island has offices worldwide, including several in the EU.  Hiring is centralized in the United States and therefore all onboarding is conducted by Human Resources professionals in Providence.  As per company policy, the company sends all new hires an employee packet and several of the forms in the packet require the collection of personal data or information.  Personal data such as name, date of birth, address, email address, etc. For its new hires in the EU, they are asked to send the employee packet back to Providence electronically so that the information can be processed for employee benefits, payroll, and a background investigation.  Therefore, personal data is being transferred to the United States for processing.   The question is, is this legal?  Does the company in Providence, Rhode Island need to do anything from a compliance perspective?  The response to the first question is, maybe if the company has a permissible cross-border transfer mechanism in place.  The second response is, yes.  Bottom line is that any U.S. based company which operates globally has to factor in international privacy and data protection laws before transferring employee personal data from outside the United States to the United States.  

Here’s why.  In the EU it is generally prohibited to collect, use, transfer, disclose or otherwise process an individual’s personal data without justification.  In case you are wondering, what’s the European Union?  The EU is made up of 28 member countries in Europe.  It includes countries such as Austria, Belgium, France, Germany, Greece, Ireland, Italy, Spain and the United Kingdom (until they depart due to Brexit).  For a full list of member countries, click here.  

What do American companies need to do?  First, if you have offices, operations or otherwise transfer someone’s personal data from the EU to the United States you need to know that. We privacy professionals call that, mapping the data flows.  In other words, are your employees, customers, consumers sending you personal data from the EU to the United States, what data and for what purpose. 

Why should American companies care?  Because in the EU they are serious about privacy and data protection.  The Europeans would argue that they are far more serious and protective of their citizen’s privacy than the Americans.  They can and will bring enforcement actions against companies that transfer personal data outside the EU without having a permissible onward transfer mechanism.  See the most recent action by German data protection authorities by clicking here.

What’s a permissible onward transfer mechanism?  In the EU, there is a general legal framework under which companies operate which is the EU Directive 95/46/EC (“EU Directive”) and it describes how organizations can lawfully “process” personal data, meaning how they can collect, use, transfer, share, store, etc. personal data.   Generally speaking—and please note that I’m focusing only on cross-border transfers of personal data in this article—an organization cannot transfer an individual’s personal data from the EU to the United States without a lawful mechanism.   That’s right, you can’t just transfer personal data without having a plan in place.  Also, not to throw in a monkey wrench, but the EU Directive will be replaced by the General Data Protection Regulation (“GDPR”)  effective 2018, which will have stricter requirements on U.S. companies with operations in the EU, including requirements related to data breaches.

What options do American companies have to lawfully transfer personal data to the United States?  A few, actually.  One is by self-certifying with the Department of Commerce’s EU-U.S. Privacy Shield program,  instituting model contract clauses or binding corporate rules, or meeting one of the other derogations described in Article 26 of the EU Directive, such as consent of the data subject to the cross-border transfer.   There are pros and cons to each of these options and that is the subject of another discussion and greater legal analysis.  This article is intended as a primer to flag the issue of cross-border transfers of personal data from the EU to the United States and compliance considerations around such.   

If your organization transfers personal data from the EU to the United States and you would like to discuss what your legal requirements or obligations may be I am happy to have that conversation with you.  The privacy team at my firm, Arnall Golden Gregory LLP, advises companies on cross-border transfers of personal data and we would be happy to assist.

 

European Data Protection Supervisor (EDPS) Giovanni Buttarelli issued his formal opinion on the EU- US Privacy Shield, arguing that while it’s a step in the right direction, “robust improvements” are needed.  The EDPS is an independent advisor/institution and this opinion, along with its recommendations, is geared primarily to the European Commission.

A notable criticism is that Privacy Shield is based on the current EU Directive 95/46/EC, which will be superseded by the new and more robust EU data protection framework, the General Data Protection Regulation (GDPR), in May 2018.   This is problematic because, in his opinion, there isn’t consistency between the current and the future framework and data controllers could find themselves seeking to comply in an environment where that compliance model is changing.

Some additional points worth highlighting are that the EDPS believes more can be done with respect to data minimization and retention as well as automated processing of personal data.  Specifically, he recommends that:

  • The language regarding data minimization and retention should be strengthened to “clearly prohibit keeping personal data in a form which permits identification of data subjects for longer than necessary for the purposes for which the data were collected or further processed.” (See page 9)
  • Language regarding automated processing of personal data — especially when it impacts individuals “performance at work, creditworthiness, reliability, conduct, etc.” — should have greater safeguards and allow for human intervention on the part of the controller to express their “point of view and to contest the decision, and to obtain information about the logic underpinning the processing.”  (See pages 9 and 10)

The EDPS concludes by stating that he “welcomes the efforts shown by the parties to find a solution for transfers of personal data from the EU to the U.S. for commercial purposes under a system of self-certification.  However, robust improvements are needed in order to achieve a solid framework, stable in the long term.”