Legislative Updates, Privacy

Washington State Legislature Moves Toward Passage of Broad Consumer Data Privacy Law

Following in the footsteps of California, and the European Union’s General Data Protection Regulation, the State of Washington is taking steps to adopt a comprehensive privacy law focused on protecting consumer information. SB 5376, better known as the Washington Privacy Act, passed in the Washington State Senate on March 6, 2019 by a vote of 46 to 1 and had a public hearing in the Washington State House Committee on Innovation, Technology & Economic Development on March 22, 2019.

The bill has also received support from Microsoft General Counsel and former U.S. FTC Commissioner Julie Brill, who reportedly described the proposed Washington Privacy Act as “a thoughtful approach taking the best provisions from European law, from California’s law, and … from some federal laws.”

In many areas, the Washington Privacy Act adopts concepts directly from the EU General Data Protection Regulation (GDPR). For example, some of the main provisions of the proposed law include:

  • The GDPR concepts of “controllers” and “processors,” heightened protections for “sensitive” data, and a broad definition of personal data;
  • The right for consumers to obtain copies of their “personal data” that is in a company’s possession in a “structured, commonly used, and machine-readable format in limited circumstances where the data is processed by automated means,” the right to request corrections for inaccurate personal data, and the right to request that their personal data be deleted (subsequent to certain exceptions);
  • The right for consumers to request that companies restrict the purposes for which their personal data will be used;
  • The right for consumers to opt out of having their personal data used for targeted advertising or other purposes absent “legitimate ground to process … the data that overrides the potential risks to the rights of the consumer;”
  • Concepts of proportionality and limits on use beyond the noticed purpose or a purpose compatible with the noticed purpose, requiring that the processing of personal data be “reasonably necessary and proportionate” for the operational purpose for which the controller or processor collected it or another operational purpose “compatible with” the context in which the data was collected;
  • An obligation for “controllers” (the companies that collect and use personal data) to enter into contracts with “processors” (their third-party service providers) regarding how processors are to make use of personal data, and a blanket requirement for controllers to ensure compliance with the statute, any delegation of duties to processors notwithstanding.
  • A requirement for controllers to assess the potential privacy risks associated with their current data processing systems, and an ongoing obligation to conduct similar risk assessments whenever changes to their data processing systems “materially increase the risk to consumers.”

The Act also requires controllers to provide privacy notes to consumers.  The notice must contain the category of personal data collected by controller, the purposes for which the personal data is used and disclosed to third parties, the rights that consumers may exercise, the categories of personal data that the controllers share with third parties, the categories of third parties, if any, with whom the controller shares personal data, the sale of personal data to brokers or processing for targeted advertising, and the manner in which the consumer can object.  The Act would require a controller to make its risk assessment available to the state’s attorney general.

However, there are some notable departures from GDPR.  The Washington Privacy Act would not apply to personal data maintained for employment records purposes. The proposed statutory language contains various other exceptions as well, including exceptions for protected health information (which is subject to HIPAA) personal data to, from or held by a consumer reporting agency and used in compliance with FCRA, or data held in compliance with the Gramm Leach Bliley Act.  Also, the Act clearly provides that it does not limit or restrict compliance with a subpoena, cooperation with law enforcement, and similar legal compliance.  Further, there is no private right of action under the current proposed bill.  Although the attorney general has enforcement power and can sue, the Act allows violators a cure period of 30 days after notice.  Proposed penalties are up to $7,500 for each intentional violation and $2,500 for other violations — a far cry from GDPR’s maximum penalty of up to 4 percent of annual global turnover.

If enacted in its current form, the Washington Privacy Act would take effect on July 31, 2021, and it would apply to companies that either (i) “conduct business in Washington or (ii) produce products or services that are intentionally targeted to residents of Washington,” and that either (a) control or process the personal data of 100,000 consumers, or more, or (b) control or process the personal data of more than 25,000 consumers and derive at least half of their gross revenue from the sale of personal data. A prior version that would have taken effect on December 31, 2020 faced opposition from the Washington Technology Industry Association due to concerns over companies’ ability to timely comply with the statute’s requirements.

We will continue to monitor developments in Washington and the trend to provide greater rights to consumers to protect their personal information.

Moore & Van Allen represents companies nationwide with regard to data privacy protection and compliance. If you have questions about your company’s data privacy and security obligations and would like to speak with an attorney, you can contact any member of our Privacy & Data Security practice group for more information.

Karin M. McGinnis

About Karin M. McGinnis

With two decades of experience as a practicing attorney, Karin McGinnis, CIPP US, has handled a wide variety of privacy and data security matters for her clients, with a special emphasis on privacy and data security issues in the workplace. Ms. McGinnis’ privacy and data security experience includes counseling and litigation regarding misappropriation of trade secrets, violation of the Computer Fraud and Abuse Act and state computer trespass laws, common law privacy torts, discovery challenges posed by the Stored Communications Act, privacy of consumer financial information under Gramm-Leach-Bliley, and confidentiality rights concerning mental health consumers. Ms. McGinnis also handles a wide variety of data breach matters for her clients, including those involving PCI-DSS compliance, and has worked with the USSS and the FBI in investigating potential cyber-crime. She has assisted clients with drafting and creating data breach procedures, mobile device policies and agreements, FACTA Red Flag policies and procedures, online privacy policies, international ethics hotlines, international data transfer agreements, vendor agreements, and employee data security training. Ms. McGinnis is co-chair of the firm’s Privacy and Data Security Group.

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The technology and regulatory landscape is rapidly changing, thus impacting the manner in which companies across all industries operate, specifically in the ways they collect, use and secure confidential data. Moore & Van Allen’s Privacy & Data Security Group recognizes the challenges clients face in the effort to stay abreast of such volatility. “Data Points” seeks to educate by providing transparent and cutting-edge insight on the most critical issues and dynamics. Our goal is to inform business decision-makers who are navigating these waters about the information they must protect, and what to do if/when security is breached.

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