Historically, most data privacy regulations have focused on protecting consumer rights. More recently, an increasing number of data privacy regulations have also included statutes designed to protect employee data privacy rights. 

The EU’s General Data Protection Regulation (GDPR) and California’s Privacy Rights Act (CPRA) carry mandates designed to protect employee privacy. But even if your company isn’t based in the EU or California, you’re not immune from these laws. 

In general, privacy laws aren’t just based on a business’s physical location, but also on where employees and customers are. With the expansion of remote work in recent years, businesses may be liable for an increasing number of data protection laws. Additionally, more states are passing data privacy laws every year, so it’s not a stretch to say that if employee privacy regulations don’t affect you now, they will in the future. 

Beyond regulations, employee privacy protection is critical to building a positive, trusting relationship between your employees and your business. Without that trust, your business risks losing its reputation, its workforce, and (potentially) its competitive edge.

What you need to know about employee privacy policies

When you onboard employees, you collect a lot of personal information. This can include your employees’ social security numbers, bank account information, address, phone numbers, and emails—all information your employees would like to keep private. 

An employee privacy policy is the documented set of expectations, processes, and practices that determine how employee personal information is stored and safeguarded, alongside how the information is collected, used, and shared by the company. 

An employee privacy policy will touch on both the scope of what personal information is collected, and the purpose and objectives of that data collection. It should also articulate the employee’s individual rights regarding their data—under laws like CCPA (as amended by CPRA), employees have the same rights as customers.  

Company privacy policy vs. an employee privacy policy

While it’s tempting to lump your employee privacy policy in with your consumer privacy policy, avoid the urge! While they both deal with similar concepts, your employee privacy policy is a separate document from your company’s general privacy policy.

Your company’s privacy policy should encompass how your company collects, uses, stores, and shares personal information from its users, clients, and employees. It should include documentation on privacy notices, data security measures, how you use cookies on your website, and employee training, among other things. 

Your employee privacy policy addresses these concerns for your employees’ personal information specifically, as well as protections for employees if they choose to exercise their privacy rights. 

Why is an employee privacy policy important for businesses?

There are many reasons why building a strong employee privacy policy is just good business, but three of these reasons are especially important to highlight. 

Build employee trust

Employee trust is the foundation of employee engagement. When a company fosters employee trust, team members are more engaged and productive in their roles, and employee turnover is lower. While there are many ways to do this, an employee privacy policy increases transparency between your business and its employees—and transparency is a key ingredient in trust. 

On the other hand, if your business loses employee trust through improper use of personal information, your employees will be more likely to disengage, be less productive, or find a new job. It’s a recipe for high turnover and low employee satisfaction.

Guard against legal liability

Companies found in violation of data privacy rights can face significant fines, which applies to consumer or employee information. 

In the EU, more serious violations can result in a fine up to 20 million euros, or up to 4% of a business’s total global turnover of the preceding fiscal year, whichever is higher. (This is how Meta ended up paying a record $1.3 billion for violating the GDPR by transferring EU consumer data to US servers.)

For California’s CCPA, unintentional non-compliance can result in fines of up to $2,500 for each violation, while intentional violations can lead to fines of $7,500 per violation. 

It’s also important to note that while some state privacy regulations (like Iowa’s) allow for a “cure” period to correct any violations or non-compliant business practices, it’s not a uniform practice. The leader of the privacy pack, the California Consumer Protection Act (CCPA), as amended by CPRA, eliminated the 30-day cure period under its original legislation. Other states may follow suit. 

What is protected under employee data privacy laws?

Under the GDPR and CCPA, employees generally have the same rights as consumers. This includes:

  • Right to access: The right to know what personal information has been collected, why it’s collected, how long it’s stored, and if the company has shared or sold that information in the last year.
  • Right to delete: If an employee wants their personal information deleted from your company’s database, you have to comply. This right can be limited by legitimate business functions.
  • Right to correct: An employee can correct inaccurate or incomplete information in their employee record.
  • Right to opt-out: Employees can opt-out of the sale/sharing of personal information with a third party.
  • Right to limit disclosure: Certain categories of sensitive personal information, such as gender, race, or sexual orientation have additional protections.
  • Right to limit automated decision-making and profiling: Team members can opt-out of having their personal information used to create a profile for automated decision-making processes.
  • Right to non-discrimination: Employers can’t discriminate or retaliate against employees for exercising their privacy rights.

In addition to these rights, companies must also take adequate data security measures to protect data and limit data collection to what is relevant and necessary.

The CCPA, as amended by CPRA, came into effect on January 1st, 2023, so these may be relatively new requirements for businesses. If your business is unsure of how to proceed, or wants to ensure effective compliance, a third-party expert can help you build an employee privacy program that works for you.

Building an employee privacy policy is a collaborative effort 

Employee privacy policies will most likely involve more than one department or team. Privacy rights for employees overlap with human resource laws, so employers may need to work with HR, IT, payroll, and legal team members to build a policy that complies with all regulations while also supporting your employees. 

The process of creating an employee privacy policy has a number of steps, such as:

  • Understand what laws and regulations apply to your business, or will apply in the near future
  • Conduct a thorough data map or inventory of employee data
  • Create a reasonable process for employees to exercise their rights
  • Make your privacy processes clear to employees and available for reference
  • Determine who is accountable for maintaining and updating your program in the future

For more information on what you should include, a detailed employee privacy policy checklist is a great place to start. 

Get help from the best

When in doubt, Red Clover Advisors can help you build a tailored privacy policy based on your business’s unique needs. Contact us today to get started with a free consultation.