Employees take and misuse company information for a variety of reasons. Some do it because they want to document what they believe to be unlawful conduct. Others do it because they intend to use it in competition with their soon to be former employers. Regardless of their motivation, when employees misuse customer information, employers must recognize that such misconduct presents more than simply a competitive or employment concern. It also may trigger significant obligations under state breach notification laws.

Forty-six states, the District of Columbia, Puerto Rico and the Virgin Islands have enacted legislation requiring companies to notify individuals when there is a security breach involving their personal information. These laws are the result of an increasing number of breaches involving personally identifiable information.

California’s law is widely recognized as the pioneer, after which a majority of states model their legislation. Although the common attributes of breach notification laws are discussed in detail below, employers must recognize that the laws vary by state, sometimes in significant ways. If your company experiences a data breach involving individuals in more than one state, it is imperative that you examine your obligations in each state as they may, and often will, be different and will require cumulative and concurrent action.

Breach notification laws commonly include: (1) A section defining the scope and nature of information covered by the law; (2) A section specifying events and conditions triggering obligations under the law; and (3) A section defining obligations under the law in the event action is required.