There are a number of data privacy laws around the world, including Europe’s GDPR and Canada’s PIPEDA. These laws aim to protect citizens and establish guidelines for how businesses can process and handle personal data. In the US, the most comprehensive state data privacy legislation is the California Privacy Rights Act (CPRA), which became fully operative on January 1, 2023.
In this post, we are going to answer questions like “What is CPRA?” and “How does the California Privacy Rights Act (CPRA) compare to the CCPA?”. We will also explain which GDPR principles the Act has adopted and provide definitions for terms including “private right of action” and “sensitive personal information”. This will help you comply with the law and reduce the risks associated with non-compliance.
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What is the California Privacy Rights Act (CPRA)?
There is no all-encompassing US federal employment law relating to employee data protection in the United States. Instead, there is a vast range of data privacy and data security laws that have been enacted on both the federal and state levels which serve to protect the personal data of U.S. employees and consumers. One such example is the California Privacy Rights Act (CPRA).
So, what is CPRA?
California is known for its progressive laws, especially those enacted in more recent years. Examples of these trailblazing laws include the California Pay Transparency Law and the California Family Rights Act (CFRA) which protects an employee’s right to take bereavement leave, amongst other provisions. The CPRA is another example of how the State of California is leading the way in terms of consumer and workplace protections.
The California Privacy Rights Act (CPRA) is a US data privacy law targeted at businesses based or operating in the state of California. It was adopted via referendum and went into effect on January 1, 2023. At its core, it aims to protect data privacy rights, including those of employees and consumers. It also expands on existing privacy data laws (namely, the CCPA which was enacted in 2018) and defines how businesses must operate when they collect, store, use, and share employee and consumer data.
Specifically, under the CPRA, the citizens of California have gained a number of new rights, including the right to:
- Correct personal information
- Prevent the use of sensitive personal information
- Opt out of personal information being shared with third parties
As the first comprehensive consumer privacy legislation of its kind in the U.S., the CPRA is changing the way companies do business and serves as a potential model for other states looking to improve their data privacy laws.
Does CPRA replace CCPA?
Many people confuse the California Consumer Privacy Act (CCPA) with the California Privacy Rights Act (CPRA). However, they are not the same thing.
CPRA vs CCPA: What’s the difference?
The California Consumer Privacy Act (CCPA) is a law that was initially approved in 2018 and went into effect in 2020. This law regulates how businesses collect, store, share, and sell consumers’ personal information and data.
The Consumer Privacy Rights Act (CPRA), approved in 2020, amends the previously established CCPA law. It outlines additional regulations that businesses must abide by to protect consumer privacy. Recently (as of January 1st, 2023), many of the CPRA’s provisions went into effect. However, much of the law’s enforcement won’t go fully into effect until July 1st, 2023.
Let’s take a look at some of the key differences between CPRA vs. CCPA to help you understand the difference.
The California Consumer Privacy Act (CCPA) was signed into law in 2018 and went into effect on January 1, 2020. It established a range of business obligations and consumer privacy rights relating to the collection and sale of personal data.
This included a consumer’s right to:
- Opt out of the sale of their personal data
- Delete personal information collected about and from them
- Nondiscrimination for exercising their CCPA rights
The California Privacy Rights Act (CPRA), also known as Proposition 24, doesn’t replace the CCPA. Instead, it significantly amends and expands the existing provisions of the CCPA.
This includes the right to:
- Opt-out of cross-contextual advertising.
- Contractual commitments from service providers relating to the protection and use of personal data. This includes how long a business can retain each category of personal data, which should be explained in a company’s public consumer privacy notice.
- The protection of employment data, not just consumer data.
The CPRA also expands the definition of breach liability. As a result, liability now also takes into account unauthorized access or disclosure of certain data elements (email addresses, passwords, security questions, etc.). Plus, it has added new provisions related to the establishment of a new government agency for the enforcement of data privacy laws in California, known as the California Privacy Protection Agency.
Related: California Employment Law explained
Data protected under the California Privacy Rights Act (CPRA)
As an employer or small business owner based or operating in California, it’s important to understand which data is protected under the California Privacy Rights Act (CPRA).
Essentially, any personal data that could be used to identify an employee or a consumer is covered by the CPRA.
This includes, but isn’t limited to:
- Names
- Email addresses
- Phone numbers
- The contents of phone calls, emails, and text messages
- Social Security Numbers (SSN)
- Physical addresses
- Driver’s license numbers
- State identification cards
- Passport numbers
- Account login information
- Bank account numbers
- Debit and credit card numbers
- Any data related to geolocation, racial or ethnic origin, religious or philosophical beliefs, union membership, or genetic and biometric information
- Any other personally identifiable information
The CPRA does not classify information that is publicly available from governmental records as personal information.
Changes and expansions under the California Privacy Rights Act (CPRA)
Let’s take a look now at some of the changes and expansions under the California Privacy Rights Act (CPRA).
There are 6 main differences between the CCPA and the CPRA that you need to be aware of.
These relate to:
- The criteria for qualifying as a business
- Modified consumer privacy rights
- A new category of protected data
- The adoption of GDPR principles
- The expansion of the private right of action
- The creation of a new privacy enforcement authority
Let’s take a look at these points in a bit more detail.
Criteria for qualifying as a business
An important change relates to the criteria for qualifying as a business.
Let’s look first at what the guidelines were under the CCPA (changes in bold).
According to the CCPA, data privacy provisions applied to all for-profit businesses that met one or more of the following thresholds:
- Has an annual gross revenue of over $25 million
- Makes 50% or more of its annual revenue from selling personal data
- Buys, sells, or receives the personal data of 50,000 or more California residents for commercial purposes, alone or jointly.
The CPRA has expanded these guidelines. The law now applies to for-profit legal entities that meet one or more of the following thresholds:
- Has an annual gross revenue of over $25 million
- Makes 50% or more of its annual revenue from selling or sharing personal data
- Buys, sells, receives, or shares the personal information of 100,000 or more households or consumers annually, alone or jointly
5 modified consumer privacy rights
The CPRA has also modified and expanded the definition of consumer privacy rights.
Previously, the CCPA created 5 specific rights for consumers.
This included the right to:
- Know what personal information is collected, used, and shared with third parties, including where it was collected from, why it was collected, and, if sold, to whom.
- Delete any collected personal data.
- Opt-out of the sale of personal data (if applicable).
- Non-discriminatory treatment for exercising any rights.
- Initiate a private cause of action for data breaches.
The CPRA has included 2 additional consumer privacy rights:
- Firstly, the right to correct inaccurate personal information.
- Secondly, the right to limit the disclosure and use of sensitive personal information. This includes stopping their data from being collected and shared along a complex targeted advertising ecosystem (e.g., automated decision-making technology, including profiling).
New category of protected data: SPI
Another important change relates to the definition of personal data.
The California Privacy Rights Act (CPRA) has introduced a new classification of personal information (PI), referred to as sensitive personal information (SPI). Moreover, it has also introduced additional use, disclosure, and opt-out requirements relating to sensitive personal information.
As we mentioned above, according to the CPRA, sensitive personal information includes:
- Names
- Email addresses
- Phone numbers
- The contents of phone calls, emails, and text messages
- Social Security Numbers (SSN)
- Physical addresses
- Driver’s license numbers
- State identification cards
- Passport numbers
- Account login information
- Bank account numbers
- Debit and credit card numbers
- Any data related to geolocation, racial or ethnic origin, religious or philosophical beliefs, union membership, or genetic and biometric information
- Any other personally identifiable information
Essentially, if you collect any of this data from your workforce (which you undoubtedly do), then your employees have the right, under the CPRA, to receive notice of said collection. Moreover, they also have the right to be notified if you sell or share any of this sensitive data. Additionally, they have the right to delete, correct or opt out of data-sharing arrangements. What’s more, if an employee decides to exercise any of these rights, you must comply with their request within 45 days of notification.
3 GDPR Principles adopted
Many businesses in California have noted the similarities between the CPRA and Europe’s General Data Protection Act (GDPR), which came into force in 2018. Generally speaking, they are right. In fact, the CPRA has adopted a number of GDPR principles.
These GDPR principles, guided by the concept of lawfulness, fairness, and transparency, relate to:
- Data minimization: Companies are required to limit the collection of personal data that is deemed directly necessary and relevant to the nature of the business.
- Storage limitation: Businesses are only permitted to retain and store personal data for a reasonable amount of time.
- Purpose limitation: Businesses can only collect personal data for explicit, specific, and legitimate disclosed purposes.
This makes it much easier to ensure compliance with both laws if your business is operating in both US and European territories.
Moreover, much like the GDPR, the CPRA also establishes a specific governing body for regulating the provisions of the Act. This body is known as the California Privacy Protection Agency (CPPA), and it has full administrative power, authority, and jurisdiction to implement and enforce the CPRA.
Expanded private right of action
A further important change relates to a consumer’s private right of action.
But, what does this mean?
Basically, the California Privacy Rights Act (CPRA) has expanded the CCPA’s scope for the private right of action. Under the terms of the new law, employees and consumers have the right to file a claim if they believe there has been a breach of their personal data. Previously, the CCPA included provisions for the private right of action. However, the CPRA has expanded these provisions so that they now also include additional types of personal information. These additional types of personal information include email addresses, security questions and answers, and passwords.
New privacy enforcement authority: CPPA
Finally, as we mentioned above, the California Privacy Rights Act (CPRA) includes the establishment of an official governing body. This governing body is known as the California Privacy Protection Agency (CPPA) and it is directly responsible for regulating the Act. It has the authority to investigate claims of data privacy breaches and enforce corrective actions, including the assignment of non-compliance penalties. Moreover, the CPPA is also responsible for promoting awareness of the CPRA and has the power to issue further regulations where applicable.
Previously, the CCPA was enforced by the California Office of the Attorney General (OAG). Instead, a specific governing body is now exclusively responsible for enforcing the protection of sensitive personal information. This should hopefully result in higher levels of data privacy compliance in the state.
Consumer rights under the California Privacy Rights Act (CPRA)
Under the terms of the California Privacy Rights Act (CPRA), your employees and customers have the right to:
- Be informed of the data you are collecting and their corresponding rights.
- Request that you disclose what sensitive personal information you have collected, and what the specific purpose of collecting this data is.
- Correct any sensitive personal information that you hold.
- Limit how you use their sensitive personal information unless it is necessary for you to perform the services or provide the goods they are requesting.
- Opt out of third-party data sales.
- Take legal action if you expose their non-encrypted sensitive personal information.
- File a claim for violations of the CPRA involving the personal information of consumers under the age of 16.
Obligations/requirements for businesses
As an employer or business owner, if you qualify under the provisions of the California Privacy Rights Act (CPRA), you have a number of specific obligations.
In particular, these obligations mean you have to:
- Provide your customers with notice of their consumer rights in the form of an “at time of collection” privacy policy. In the case of employees, you also have an obligation to post an employee privacy statement in your place of business and ensure your employees understand what personal information you have collected from them.
- Honor these consumer rights.
- Fulfill all your obligations relating to the disclosure and retention of sensitive personal information.
- Facilitate consumer requests relating to the omission, retraction, or sharing of sensitive personal information unless you specifically require access to this information in order to provide the products or services that a consumer has requested.
- Facilitate requests relating to the disclosure and amendment of sensitive personal information.
- Implement security safeguards, such as the encryption of sensitive personal information.
Enforcement and penalties
So, what happens if you don’t comply with the CPRA?
In the event of non-compliance with any of the obligations established by the California Privacy Rights Act (CPRA), the California Privacy Protection Agency (CPPA) has the right to impose a number of penalties.
What are these penalties?
Basically, these include:
- Civil penalties of up to $7,500 per intentional (willful) violation or $2,500 per unintentional (negligible) violation.
- Damages. Consumers are entitled to statutory damages of no less than $100 and no more than $750.
- Non-monetary relief. If an employee or consumer files a claim for a security breach violation, they are also entitled to seek injunctive or declaratory relief, as well as any other relief the court deems appropriate.
Unquestionably, the best way to avoid these penalties is to implement standards and procedures that ensure you handle all consumer and employee data in a responsible and ethical manner. For example, you should develop stronger data protection processes and controls and adapt to any new data privacy compliance requirements that might be included in the Act in the future.
California Privacy Rights Act (CPRA) compliance tips
Above all, there are two main aspects you need to consider and evaluate to ensure CPRA compliance:
- What changes do you need to make to your internal processes, policies, procedures, and systems to ensure ongoing compliance?
- How will you notify your customers, partners, and employees of the changes and their additional rights under the CPRA?
Here are a few additional tips to help you with this:
- The first step is conducting a detailed audit of the data your organization collects. Above all, make sure you understand the types of data you collect, why you collect it, how you handle it, and how you protect it. You should also identify which categories of data are sensitive personal information and consider removing the collection of any data that is not strictly necessary for the purpose of your business.
- Secondly, make sure your employees and customers are aware of their rights under this law.
- Thirdly, review and update your internal processes, policies, procedures, and systems so that they comply with all requirements of the CPRA.
- Additionally, update your privacy notice so that it aligns with CPRA disclosure requirements.
- Likewise, it’s also a good idea to update your contracts with employees, service providers, contractors, and third parties to ensure they include the required CPRA provisions.
- Moreover, conduct a comprehensive privacy and cybersecurity risk assessment.
- Lastly, use an encrypted document management system to handle all the SPD that you collect, store, and manage.
Ultimately, by understanding all your obligations under the California Privacy Rights Act (CPRA) and designing a comprehensive plan of action to ensure compliance, you can successfully avoid undesirable enforcement penalties. Above all, this is important because non-compliance can not only damage your company’s finances – it can also have a negative effect on your brand and reputation.
