Image resultIt has been reported that infamous bank robber, Slick Willie Sutton, once said, “I rob banks because that’s where the money is.” Data thieves, understandably, have a similar strategy – go where the data is. The retail industry knows this as it has been a popular target for payment card data. The healthcare and certain other industries do as well considering ransomware attacks have increased four-fold since 2015. But the retirement plan industry must also see that it too is a significant target – that’s where a lot of data is!

PR Newswire reported yesterday that the UFCW Local 655 Food Employers Joint Pension Plan is notifying participants that it suffered a ransomware attack. In general, a “ransomware” attack occurs when a hacker takes control of the victim’s information systems and encrypts its data, preventing the owner from accessing it unless the victim pays a sum of money, usually in the form of bitcoins. The data at risk in the UFCW Local 655 case included individuals’ names, dates of birth, Social Security numbers, and bank account information. Every retirement plan, including pension and 401(k) plans, maintains this and other data about current and former participating employees, and their surviving spouses and designated beneficiaries, as applicable.

The question is whether plan sponsors and third party service providers are doing enough to safeguard the treasure troves of data they maintain.

On November 10, the ERISA Advisory Council, a 15-member body appointed by the Secretary of Labor to provide guidance on employee benefit plans, shared with the federal Department of Labor some considerations concerning cybersecurity. The Council noted that it is not seeking to be prescriptive, nor is it providing an opinion on fiduciary duties concerning protection of data. However, it is hoping its considerations will be publicized and “provide information to the employee benefit plan community to educate them on cybersecurity risks and potential approaches for managing those risks.”

According to the Council, there are four major areas for effective practices and policies:

  • Data management.
  • Technology management.
  • Service provider management.
  • People issues.

This is a good list to work from. Consider, for example, the wide range of service providers that perform various services to retirement plans – record keepers, auditors, law firms, accountants, actuaries, investment managers, brokers, etc. These organizations access, use, maintain, and disclose vast amounts of personal information in the course of servicing their retirement plan customers. Do these organizations have sufficient safeguards in place? Do you know if they do? What does the services agreement say?

Obviously, services providers are not the only source of risk to retirement plan data. As the Council points out, there are other considerations for plans concerning cybersecurity, such as:

  • Know your data and assess your risk (how it is accessed, shared, stored, controlled, transmitted, secured and maintained).
  • Think of how you could and should protect it (e.g., applicable federal and state laws, NIST, HITRUST, SAFETY Act, and industry-based initiatives).
  • Protect it with appropriate policies and procedures and an overall strategy taking into account available resources, cost, size, complexity, risk tolerance, insurance, etc.

In most discussions about data security and employee benefit plans, HIPAA tends to loom large. While important, with respect to employee benefit plans, the HIPAA privacy and security regulations only reach health plans, not retirement plans. But, as noted above, data thieves want to go where the data is, and that includes retirement plans.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.