Human resources (HR) data privacy has become an increasingly important issue for companies to address. With more employee data being collected and stored digitally, there are growing risks around how that data could be misused or exposed. Companies that don’t take HR privacy seriously risk damaging their employer brand, facing legal consequences, or enabling cyberattacks.
What types of HR data require privacy protections?
HR departments collect and maintain a wide variety of sensitive employee information that requires privacy safeguards. This includes:
- Personally identifiable information (PII) like names, dates of birth, addresses, Social Security numbers, passport numbers, etc.
- Contact information such as phone numbers and email addresses
- Financial information including bank account details, tax documents, pay and compensation data
- Medical records, health insurance data, disability status, drug test results
- Background check information and employment eligibility records
- Performance reviews, disciplinary records, investigation reports
- Emails, internal communications, and system usage logs
- Diversity, equity and inclusion survey responses
All of this employee data needs to be properly secured and protected from unauthorized access or disclosure. Companies have an ethical and legal responsibility to safeguard the privacy rights of their workforce.
Why is HR data privacy important?
There are several compelling reasons why HR privacy should be a top concern for organizations:
- Compliance: Data privacy laws like EU’s GDPR and California’s CCPA impose strict regulations around collecting and securing personal data. Failing to protect HR data can lead to heavy fines and penalties.
- Cybersecurity: HR systems contain highly sensitive information that makes them prime targets for cybercriminals. Lax security puts employee data at risk.
- Litigation risks: Mishandling of private employee records can open companies up to lawsuits and regulatory investigations.
- Employee relations: Workers expect their personal information to be handled with care. Violations of their privacy causes mistrust.
- Reputational damage: Data breaches or leaks endanger a company’s brand and public image. Loss of trust is difficult to recover from.
- Competitive advantage: A strong culture of ethics and privacy protection differentiates an employer in a positive light.
Given the many legal, financial and reputational hazards, HR privacy should be treated as a serious governance, risk and compliance priority for businesses.
What are the best practices for HR data privacy?
Protecting HR data privacy requires a multi-faceted strategy and diligent governance. Recommended best practices include:
- Consent-based collection: Only gather the minimum employee data needed for legitimate purposes. Obtain explicit consent wherever possible.
- Secured systems: Ensure HR data is stored in secure networks and servers to prevent unauthorized access.
- Access controls: Restrict data access to employees who need it for their specific roles. Follow least privilege principles.
- Encryption: Use encryption technologies to scramble sensitive data in transit and at rest.
- Audits: Continuously monitor HR systems and data usage to identify potential misuse or policy violations.
- Training: Educate all employees, especially HR staff, on privacy protection responsibilities.
- GDPR compliance: Formally assess and certify compliance with EU’s General Data Protection Regulation.
- Data minimization: Only retain employee records for mandated periods; securely delete outdated data.
- Third-party vetting: Review the data security of HR vendors before sharing any employee information.
- Incident response plan: Be prepared to promptly notify regulators and impacted individuals in case of a data breach.
A holistic framework of policies, technologies, training and governance helps ensure HR data privacy risks are minimized.
What HR privacy policies and notices should be in place?
HR teams need to have clear, comprehensive policies and notices in place to set expectations around employee data privacy. These include:
- Employee privacy policy: Sets out the standards and controls in place to protect private employee information across HR systems and processes.
- Data protection policy: Provides more detailed governance for securing sensitive employee data within relevant jurisdictions.
- BYOD policy: Covers privacy risks associated with bring-your-own-device programs in the workplace.
- Email monitoring policy: Notifies employees if work email accounts will be monitored and establishes controls around access.
- Remote work policy: Addresses data privacy considerations for employees working outside the office.
- Surveillance notice: Discloses any video monitoring or tracking of employees within work premises.
- Privacy notice: Explains what employee data is collected, the purposes, how it is secured, retention periods and individual rights.
These policies and notices should be easy for employees to access and review at any time. They help provide transparency around HR data practices.
What employee rights should be protected?
Alongside establishing strong policies and controls, HR privacy strategies must uphold employee rights including:
- Right to access: Employees should be able to request copies of HR data held about them.
- Right to rectification: Employees can request corrections to inaccurate or incomplete personal data.
- Right to erasure: Employees can ask for certain HR data to be deleted, such as after leaving the company.
- Right to restrict processing: Employees can limit how their sensitive data is used and accessed.
- Right to data portability: Employees can obtain their data in a portable format to reuse across different services.
- Right to object: Employees can object to the processing of their personal data on legitimate grounds.
- Right to not be subject to automated decision-making: Employees can object to HR decisions (hiring, firing, promotions) made solely by algorithms.
Empowering employees with these rights creates trust and demonstrates a people-centric approach to privacy.
What are the penalties for HR data privacy violations?
Organizations must recognize that failure to protect HR data can carry severe penalties beyond just reputational damage. Key penalties include:
- Fines: Privacy regulators can issue substantial fines for violations – up to 4% of global revenue under GDPR.
- Lawsuits: Employees can take legal action over privacy violations, leading to costly settlements.
- Debarment: Federal contractors can be barred from government projects for unlawful HR data practices.
- Consent decrees: Regulators can force companies into legal agreements requiring ongoing audits and controls.
- Jail time: Executives can face criminal prosecution and jail time for egregious privacy violations in some jurisdictions.
- Loss of licenses: Financial regulators can revoke licenses and permissions to operate after major data breaches.
The financial, legal and regulatory consequences provide ample incentive for organizations to invest in HR data privacy diligently.
How should HR data breaches be handled?
Despite best efforts, HR data breaches can still occur, whether due to cyberattacks, insider threats or human error. Proper breach response procedures are crucial. Key steps include:
- Rapidly assembling an incident response team including HR, IT, legal, executives, PR, and third-party forensics experts.
- Investigating the root cause, compromised data types, affected systems, and potential impact.
- Notifying individuals, regulators, law enforcement, and external stakeholders according to breach notification laws.
- Providing data monitoring services and support resources to affected employees.
- Retaining external PR experts to communicate to the media and general public.
- Strengthening security controls and policies to prevent repeat occurrences.
- Reporting findings to regulators and affected individuals per investigation requirements.
- Providing regulators with evidence of improved data practices to avoid further sanctions.
Effective crisis management demonstrates accountability and helps rebuild stakeholder trust after an HR data breach.
Conclusion
HR data privacy represents both a compliance obligation and social responsibility for companies. By embracing privacy protections as an ethical imperative rather than just a checklist exercise, organizations can build trust with employees and avoid significant legal, financial and reputational risks. Empowering individuals with privacy rights, ensuring transparency in policies, and investing in strong security controls are the cornerstones of responsible data management. With robust governance and diligent oversight, companies can develop a culture where HR data privacy is taken seriously across the business.
