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Data processors under the GDPR

In our monthly GDPR Updates we discuss various key issues of the General Data Protection Regulation, (EU) 2016/679 (the GDPR), which applies from 25 May 2018. With the introduction of the GDPR, the existing Directive 95/46/EC and its implementation in the local laws of the various EU Member States will be repealed. The GDPR will bring significant and substantial changes with respect to the processing of personal data. It introduces several new concepts, such as Privacy by Design, Privacy by Default and Data Portability. As the GDPR contains several onerous obligations that require significant preparation time, organisations are recommended to timely commence the implementation process.

We notice that personal data protection is becoming more and more topical within organisations, and that the first steps towards compliance with the GDPR are undertaken. Our GDPR Updates illustrate the relevant changes resulting from the GDPR and provide readers with practical recommendations on the implementation of the GDPR within their organisations.

In the August edition of our GDPR Updates we address the position of the data processor. Under the GDPR the data processor is given certain specific responsibilities, meaning that it will no longer be only the data controller who is responsible for compliance with the privacy regulations. From 25 May 2018 also the data processor can be held liable for not complying with the GDPR requirements and additional legislation relating thereto.

If the data processor falls within the territorial scope of the GDPR (data processors will be confronted with an expansion of the territorial scope of the European privacy regulations), the data processor could face the following obligations:

  • the obligation to designate a representative in the EU if the data processor is not established in the EU but its processing is related to (i) offering of goods and/or services to data subjects in the EU; or  (ii) monitoring of data subjects in the EU;
  • complying with the mandatory requirements with regard to the content of the processing agreement as set out in Article 28 GDPR;
  • the obligation to maintain a written record of processing activities. Note that this obligation is not applicable to organisations employing fewer than 250 employees, unless (i) the processing is likely to result in a risk to the rights and freedoms of data subjects, (ii) the processing is not occasional, or (iii) the processing includes special categories of data. Data processors that provide services whereby the processing of personal data is standard practice are not likely to fall within the scope of the exceptions and will therefore be obliged to maintain a written record of processing activities (e.g. SaaS, hosting and other cloud service providers);
  • the obligation to designate a data protection officer if (i) the data processor is a public authority or body; (ii) its core activities consist of processing on a large scale of special categories of personal data or data relating to criminal convictions; or (iii) its core activities consist of processing operations that require regular and systematic monitoring of data subjects on a large scale; and
  • the obligation to notify the data controller (without undue delay) after becoming aware of a breach of the processed personal data and assist the data controller in ensuring compliance with its subsequent obligations towards the competent supervisory authorities and (where necessary) the data subjects.

Instead of only being contractually liable on the basis of a processing agreement with a data controller, under the GDPR data processors will also be subject to administrative liability in case of non-compliance. Administrative fines can increase up to EUR 20 million or (if higher) 4% of the total worldwide annual turnover of the organisation concerned. In addition to administrative liability and contractual liability towards the data controller, a data processor can be held liable towards data subjects who have suffered damages as a result of a breach of the GDPR by the data processor.

Organisations are recommended to carefully examine their positions within the various data processing activities and to make a very clear assessment on the associated responsibilities and obligations. A careful inventory should be made of the parties involved in the various personal data processing activities within an organisation and their roles (data controller/co or joint data controller/data processor/sub-processor, et cetera). This is particularly relevant as the division of roles directly influences the responsibilities a party has in the personal data processing activity, as well as the corresponding liability.

Please click here to read the entire August GDPR Update.

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Data processors under the GDPR

Freedom of Expression and Privacy in Labour Disputes: Amendments to Alberta’s Personal Information Protection Act in Force

Alberta’s Personal Information Protection Act (PIPA) entered 2015 with a (slightly) new look. Amendments set out in Bill 3, the Personal Information Protection Amendment Act, 2014, came into force on December 17, 2014. Bill 3 was tabled to address the Supreme Court of Canada’s (SCC) declaration of sections of PIPA to be unconstitutional in Alberta (Information and Privacy Commissioner) v. United Foods and Commercial Workers, Local 401. The case is outlined in more detail in a previous post; in brief, the SCC held that PIPA restricted the union’s ability to communicate its cause during a lawful strike, and is an unreasonable interference with the section 2(b) right to freedom of expression under the Charter of Rights and Freedoms.

The amendments to PIPA directly address the constitutional issue in the context of the expressive activities of unions in relation to a labour relations dispute. The collection, use, and disclosure of personal information by trade unions remain subject to PIPA, but certain exemptions to consent now apply in that context. PIPA now permits a trade union to collect, use and disclose personal information about an individual without consent where, subject to any additional requirements that may be imposed by regulation:

  1. The purpose is to inform or persuade the public about a “matter of significant public interest or importance relating to a labour relations dispute” involving the trade union;
  2. The collection, use or disclosure is reasonably necessary for that purpose; and
  3. It is reasonable to collect the personal information without consent for that purpose, taking into consideration all relevant circumstances, including the nature and sensitivity of the information.

Going forward, interpretation by the courts of what is considered a “matter of significant public interest or importance” and the weight afforded to the “nature and sensitivity” of personal information will be closely watched.

The amendments to PIPA are narrowly prescribed to trade unions, and do not attempt to tackle broader considerations of how freedom of expression should be balanced against the privacy interests of individuals in other contexts. In terms of their broader effect, they are more a tweak to PIPA rather than a revamp. However, 2015 is to see the first step towards what may result in broader changes, with PIPA due for a comprehensive review by a special committee of the Legislative Assembly that must commence by July 1, 2015. A final report to the Legislative Assembly, due within 18 months following the start of the review, may include recommendations for amendments to PIPA or any other enactment.

This review provides an opportunity for lawmakers to reflect further upon how the constitutional right to freedom of expression should be balanced against privacy interests even outside the labour disputes context. Broader changes to PIPA to consider these constitutional protections may still be seen in the future.

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Freedom of Expression and Privacy in Labour Disputes: Amendments to Alberta’s Personal Information Protection Act in Force

Who’s Minding The Store?

Late last week, the office of the Privacy Commissioner of Canada announced a major breach within its own office with the loss of an unencrypted hard drive containing sensitive personal information relating to over 800 of its current and past employees.  The loss provides a test to Interim Privacy Commissioner Chantal Bernier, who recently took over the top job on an interim basis from departing Commissioner Jennifer Stoddart.

The Privacy Commissioner’s office announced that the information first went missing in mid-February during an office move, and that the breach was discovered in mid-March.  It was not until early April that it was determined that the hard drive contained sensitive financial information, including salaries.  Adding insult to injury, some of the missing personal information dated back 12 years. It is not clear what retention period should have applied to the data. Under Privacy Act regulations, the Commissioner would be required to retain the personal information for at least 2 years. Indefinite retention would be contrary to best practices; however, the Privacy Commissioner may be constrained by the provisions of the Library and Archives of Canada Act from destruction of the information without permission of the Librarian and Archivist depending on the exact nature of the records.   Likewise, the Office of the Information and Privacy Commissioner of Ontario has different obligations.  In any event, this lengthy retention raises questions about appropriate retention periods and whether the information ought to have been securely destroyed after an applicable retention period expired.

In fairness to the Commissioner’s office, it is believed that the missing information is not accessible without specialized software and technical knowledge, and that the information taken cannot result in identity theft.  But it may be a concern to Canadian entities bound by the Personal Information Protection and Electronic Documents Act as well as the Privacy Act to know that not only did the breach occur, but the Commissioner’s office did not notify employees or the media immediately, and did not file a police report.  On the good news front, Commissioner Bernier has stated that the breach gives her better insight as to what amount of time is reasonable for an organization to investigate a possible breach prior to taking action.

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Who’s Minding The Store?

The Importance of Policies

A recent settlement with the US Department of Health and Human Services Office of Civil Rights (OCR) demonstrates the importance of privacy and security policies, even other violations of regulations do not occur.  APDerm, a Massachusetts-based dermatology practice, agreed to pay $150,000 to settle claims that it violated HIPAA and HITECH regulations by failing to have in place breach notification policies and procedures.

OCR began an investigation of APDerm after receiving a report of a lost USB thumb drive that may have included the PHI of up to 2,200 individuals.  Despite uncovering no evidence of actual harm or that PHI had been accessed, and a timely notification to potentially affected individuals, APDerm lacked written policies and procedures regarding the notification rule or to train workforce members, among other alleged HIPAA violations.

Story here

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The Importance of Policies

California Court Interprets E-Mail Addresses under the Song-Beverly Act

One of the most interesting and important developments in retail privacy cases is a recent unpublished decision, Capp v. Nordstrom.  The Court in Capp interprets the California Song-Beverly Act’s application to email addresses.  Nordstrom requested an email address from its customer in order to send an electronic version of the customer’s receipt.  The Court, in a matter of first impression, found the email address constituted “PII” [Personal Identification Information] as defined in the Credit Card Act at Cal. Civ. Code section 1747.08(b).  The broader potential implication of Capp, is that the Court did not find the exception for “special purpose” applied.  This exception allows the collection of PII, ” for a special purpose incidental but related to the individual credit card transaction, including, but not limited to, information related to shipping, delivery, servicing, or installation of the purchased merchandise, or for special orders.”  The rational in the Nordstrom case was that even where retailors obtain and use PII for a special purpose, that  does not then allow the retailor to use the information for all purposes.  This issue is going to be hotly contested in California and other jurisdictions with similar exceptions and may implicate the use of loyalty programs.  How courts determine this issue will likely turn on what the program agreements provide in terms of how the information will be used, an issue not previously dealt with in any of the current case authority.

There is some practical, if not limited, guidance provided in the opinion on the importance of when retailors ask for PII at the point of sale.  While the Court rejects Nordstrom’s argument that the federal CAN-SPAM Act pre-empts the Song-Beverly Act from governing email, the court suggests that if the information [here the customer’s E-mail]  is requested after the transaction is complete, it would comply with the Song-Beverly Act and could also comply with the federal CAN-SPAM objectives.   This provides support for the position that the temporal aspect of the request is key.  Thus, if the transaction is over and a retailor obtains a customer’s PII and an agreement from the customer about future uses, the retailor can comply with the Act.

This case adds to the issues for retailers regarding point of sale requests for information, the use email even for special purposes such as giving receipts.  The case signifies a trend where courts are likely to expand the definition of PII to include any type of information that can link to a customer’s identify for use in marketing or other data mining.

Story Here

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California Court Interprets E-Mail Addresses under the Song-Beverly Act