international employment law firm alliance L&E Global

U.S. Employers with EU Employees Gearing Up for the GDPR

With the continuing parade of high profile data security breaches, the concern U.S. organizations have about the security of their systems and data has been steadily growing. And rightly so. Almost every organization processes (collects, uses, stores, or transmits) individually identifiable data. Much of this data is personal data, including employee data, which brings heightened privacy and security responsibilities and obligations.

For certain entities, these responsibilities and obligations are about to increase significantly. On May 25, 2018, the EU General Data Protection Regulation (GDPR) goes into effect. This is a game changer for those organizations subject to the jurisdiction of the GDPR, and not just because of its new data breach notification provision. The GDPR contains expanded provisions for data collection, retention, and access rights unlike those they are used to in the U.S. that will create substantial challenges for U.S. employers processing their EU employee data.

To effectively meet these challenges, U.S. employers need to take stock of the data they process concerning individuals relating to EU operations (and not just about employees, although that is our focus here). What categories of EU employee data are processed? Where does it comes from? In what context and where is it processed and maintained? Who has access to it? Are the uses and disclosures being made of that information permitted? What rights do EU employees have with respect to that information? The answers to these questions are not always self-evident. Employee data may cover current, former, or prospective EU employees as well as interns and volunteers. It may come from assorted places and be processed in less traditional contexts. And, it may be processed in the cloud, the U.S., or elsewhere outside the EU.

Starting with the source of EU employee data, the U.S. employer should review its connections with the EU. Does it have a EU branch or office, a subsidiary or affiliate? An EU franchise, agent, or representative? Has it recently merged or acquired an organization with EU locations or connections? Any one of these connections is a potential source of EU employee or comparable internal personal data, regardless of how small.

Next, how does the U.S. employer process its EU employee or internal personal data? This data can be processed in traditional contexts – HRIS, benefits, payroll, Active Directory or contact information, and recruitment or talent management. It can be processed in other contexts – Customer Relationship Management, software applications, IT maintenance and security review activity, surveillance images, remote log in, business-related travel and event attendance support, professional development, training and certification, and external facing websites simulating annual reports or collecting job applications. Even if the U.S. employer outsources payroll, benefits administration, or HR, it may still process EU employee or internal personal data in other contexts.

For a specific example of employee data processing, consider the internal facing website or employee that facilitates business travel or conference registration. This service collects the EU employee’s personal data in the form of name, address, phone number, work title and work address. However, it may also collect the EU employee’s special hotel and dining accommodations needs. This additional information may reveal health, disability, or religious beliefs information about the EU employee, all of which are subject to heightened protections. In another example, the organization’s training portal may use video presentations featuring internal trainers. These videos contain employee personal data – the trainer’s photo and, perhaps, work contact information. Locating and identifying all forms of EU employee data processing is critical.  However, knowing what actually constitutes EU employee personal data is key.

Identifying employee personal data in the context of the GDPR is challenging. The GDPR definition, especially when applied to an EU employee, can be expansive. And for U.S. employers, often surprising. EU employee personal data includes “any information relating to an identified or identifiable” EU employee. Identifiable simply means the employee can be “identified directly or indirectly… by reference to an identifier… or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural, or social identity of that natural person.” This may include name, address, driver’s license number, date of birth, passport number, vehicle registration plate number, phone number, photos, email address, id card, workplace or school, and financial account numbers. With respect to employees, it may also encompass – gender, personnel reports (including objective and subjective statements), recruitment data, job title and position, work address and phone number, salary information, health and sickness records, monitoring and appraisals, criminal records, rent, retirement or severance data, and online identifiers such as dynamic IP addresses, metadata, social media accounts and posts, cookie identifiers, radio frequency tags, location data, mobile device IDs, web traffic surveillance that identifies the machine and its user, and CCTV images.  ‘Special categories’ of employee data – racial and ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, data concerning an employee’s health, sex life, or sexual orientation, and biometric and genetic data – require heightened levels of protection under the GDPR. Given the broad interpretation of personal data under the GDPR, a determination of what constitutes employee personal information is often based on relevant facts and circumstances.

May 2018 is approaching quickly. The GDPR may bring new and enhanced obligations for U.S. employers. Significant among these is employee consent to processing personal data. With this in mind, employers should begin evaluating their organizations through the lens of employee data collection and processing, keeping in mind applicable national laws.