Employers in Pennsylvania need to take note of a new ruling by the state high court that makes them liable if sensitive personal information belonging to their employees is breached and misused.
It's not yet clear, however, exactly what measures employers are expected to adopt as part of their duty to safeguard the information. Right now, the state's laws only require employers (and other holders of sensitive data, like banks, creditors and retail stores) to notify the affected parties that their data was accessed -- basically giving them the ability to be aware of credit theft and other misuses.
The new ruling by the Pennsylvania Supreme Court affects all employers, regardless of their size or industry, when their employees' information, e.g., Social Security numbers, direct deposit bank account information and other data that could be misused about is stored on a computer system that can be accessed via the internet. Employers are now required to exercise "reasonable care" when safeguarding that information. If an employer fails in that obligation, they can be held liable for whatever financial damages the employee ultimately suffers.
If you're a small business owner, what does this mean? Only those companies within the state that somehow manage to keep all their payroll records on paper and don't do any payroll or tax activity online are insulated from potential liability. In other words, you probably have to pay attention to this ruling because virtually no employer is excluded.
This ruling falls in line with the growing recognition that data and identity theft are two of the biggest financial crimes of concern in today's world. Identify theft can be a nightmare for its victims and cost thousands of dollars in losses. According to the Department of Justice's 2014 study, identity theft victims lost an average of $1,343 -- although individual losses can be much higher.
Still not sure about what this means for you? Talk to an attorney with employer liability prevention experience about employee data theft and other issues that concern you.