Businesses Should Prepare for More State-Specific Privacy Laws, Attorneys Say
“The privacy landscape in the U.S. is likely to become more complicated before it gets any easier.”
Em McPhie
WASHINGTON, January 13, 2023 — In the absence of overarching federal legislation, several states are passing or considering their own privacy laws, creating an increasingly disparate legal landscape that may be difficult for national companies to navigate.
“I think the privacy landscape in the U.S. is likely to become more complicated before it gets any easier,” said Joan Stewart, an attorney specializing in privacy, data governance and regulatory compliance, at a webcast hosted by Wiley on Thursday.
New privacy laws in California and Virginia took effect on Jan. 1, and Colorado and Connecticut have privacy laws set to become effective in July. Utah’s privacy law will go into effect at the end of December.
“We expect to see additional states actively considering both omnibus and targeted privacy laws this year,” Stewart said. “So we encourage businesses to focus now on creating universal privacy programs that can adapt to these new laws in the future.”
Although the various state laws have plenty of overlap, there are also several significant outliers, said Kathleen Scott, a privacy and cybersecurity attorney.
States take different approaches to imposing privacy
For example, the new California Privacy Rights Act — which amends and strengthens California’s existing digital privacy law, already considered the strongest in the country — requires that businesses use specific words to describe the categories of personally identifying information being collected.
“These words are unique to California; they come from the statute, and they don’t always make perfect sense outside of that context,” Scott said.
Another area of difference is the consumer’s right to appeal privacy-related decisions. Virginia, Colorado and Connecticut require businesses to offer a process through which they explain to consumers why a specific request was denied.
While implementing a universal standard make compliance easier for businesses, Scott noted that “processing appeals can be pretty resource intensive, so there may be important reasons not to extend those outlier requirements more broadly to other states.”
Generally speaking, the state privacy laws apply to for-profit businesses and make an exception for nonprofits. However, Colorado’s law applies to for-profit and nonprofit entities that meet certain thresholds, and the Virginia and Connecticut laws carve out select nonprofits as exempt instead of having a blanket exemption.
Other state-to-state differences include specific notices, link requirements and opt-in versus opt-out policies. Even key definitions, such as what qualifies as “sensitive data,” vary from state to state.
Two of the state privacy laws taking effect in 2023 authorize the development of new rules, making it likely that additional expectations are on the horizon.
California will not begin civil and administrative enforcement of the CPRA until July. In the meantime, the state’s new privacy agency is charged with developing rules for its implementation, including specific directives for required notices, automated decision-making and other issues.
“The California rulemaking has been particularly complicated… and the outcome is going to have significant impacts on business practices,” said Duane Pozza, an attorney specializing in privacy, emerging technology and financial practices.
The state’s attorney general is arguing that existing rules require a global opt-out mechanism, but the new law establishes this as optional, Pozza explained. The currently proposed rules would again require a global opt-out.
Colorado’s attorney general is undertaking a similar rulemaking process, revising a previously released draft of the rules in preparation for a February hearing.
Several additional states are expected to propose broad or targeted privacy laws during the coming legislative cycle, according to data published Thursday by the Computer and Communications Industry Association. In addition to comprehensive consumer data privacy legislation, several measures address the collection of biometric information and children’s online safety, the CCIA found.
