On November 2nd, New York Attorney General Eric T. Schneiderman announced his proposal of the SHIELD Act – Stop Hacks and Improve Electronic Data Security Act – a bill that would heighten data security requirements for companies and better protect New York residents from data breaches of their personal information.

“It’s clear that New York’s data security laws are weak and outdated. The SHIELD Act would help ensure these hacks never happen in the first place. It’s time for Albany to act, so that no more New Yorkers are needlessly victimized by weak data security measures and criminal hackers who are constantly on the prowl,” said Attorney General Eric Schneiderman.

Key aspects of the proposed SHIELD ACT include:

  • Covering any business that holds sensitive data of New York residents. Interestingly, the proposed legislation would amend the existing breach notification requirement to remove language currently limiting application of the notification rule to persons or businesses that conduct business in New York
  • Requiring all covered businesses to implement “reasonable” administrative, technical, and physical safeguards to protect sensitive data
  • Businesses that are already regulated by and comply with certain applicable state or federal cybersecurity laws (e.g., HIPAA, NY DFS Reg 500, Gramm-Leach-Bliley Act) are considered “compliant regulated entities” under the SHIELD Act. These entities and others that are annually certified by an authorized and independent third party to be compliant with certain data security standards, such as the most up to date version of the ISO /NIST standards, are called “certified compliant entities.” These entities are deemed to be compliant with the proposed law’s reasonable safeguard requirements, and a safe harbor from state enforcement actions would apply to “certified compliant entities”
  • A more flexible standard would exist for small businesses (less than 50 employees and under $3 million in gross revenue; or less than $5 million in assets)
  • Data breach notification obligations would become broader by (i) adding “access to” (in addition to the current trigger “acquisition”) as a trigger for notification, and (ii) expanding the data elements that if breached would require notification to include username-password combination, biometric data, and HIPAA covered health data
  • Deeming inadequate security to be a violation of General Business Law § 349 and permitting the Attorney General to bring suit and civil penalties under General Business Law § 351

AG Schneiderman’s proposed bill comes on the heels of several massive data breaches and ransomware attacks (e.g., Wanncry). The proposed SHIELD Act has the support of two major sponsors in the State Legislature: Senator David Carlucci (D-Clarkstown) of the Independent Democratic Conference and Assemblyman Brian Kavanaugh (D-Manhattan) who led their chamber’s consumer protection committees.

Although the SHIELD Act is a significant step forward for the Empire State, it does not come as a surprise. Attorney General Schneiderman has been vocal and proactive in the pursuit of heightened data security. Following a recent massive credit reporting agency breach, Schneiderman sent formal inquiries to the two other major credit reporting agencies, asking them to detail their security measures, steps they have taken since learning the breach and how they will further assist consumers in protection of their personal information.

In addition, AG Schneiderman has issued several enforcements actions in 2017 against companies that have failed to effectively protect consumer information. In January, Schneiderman announced a settlement with Acer Service Corporation, a computer manufacturer in Taiwan, after a data breach of its website exposed 35,000 credit card numbers. An investigation by the AG office revealed that sensitive customer information had not been protected for almost a full year. Acer agreed to pay $115,000 in penalties and improve data security practices. In April, Schneiderman announced that TRUSTe, Inc., agreed to settle allegations that it failed to properly verify that customer websites aimed at children did not run third-party software to track users. TRUSTe agreed to pay $100,000 and “adopt new measures to strengthen its privacy assessment”. In June, Schneiderman issued his first enforcement action against a wireless security company, Safetech Products LLC, for failing to implement adequate security in its Internet of Things (IoT) devices. It was found that Safetech did not force users to reset default passwords, and did not encrypt passwords sent over the network. As part of the settlement agreement, Safetech agreed to implement a written comprehensive security program.

AG Schneiderman did not begin enforcing New York’s data security laws and regulations in 2017; the issue has been a growing area of concern in his office for some time. In January of 2015, on the heels of former President Obama’s announcement of a cybersecurity legislative proposal, AG Schneiderman indicated his own plans to propose legislation to heighten New York’s data security laws.

The SHIELD Act, if enacted, would have far reaching effects, as any business that holds sensitive data of a New York resident would be required to comply.  Moreover, given the nation’s heightened awareness of cybersecurity in the wake of the recent massive data breaches, other states may also consider similar legislation.

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Photo of Jason C. Gavejian Jason C. Gavejian

Jason C. Gavejian is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. and a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals.

As a Certified Information Privacy Professional (CIPP/US), Mr. Gavejian focuses on the matrix…

Jason C. Gavejian is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. and a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals.

As a Certified Information Privacy Professional (CIPP/US), Mr. Gavejian focuses on the matrix of laws governing privacy, security, and management of data. Mr. Gavejian is Co-Editor of, and a regular contributor to, the firm’s Workplace Privacy, Data Management & Security Report blog.

Mr. Gavejian’s work in the area of privacy and data security includes counseling international, national, and regional companies on the vast array of privacy and security mandates, preventive measures, policies, procedures, and best practices. This includes, but is not limited to, the privacy and security requirements under state, federal, and international law (e.g., HIPAA/HITECH, GDPR, California Consumer Privacy Act (CCPA), FTC Act, ECPA, SCA, GLBA etc.). Mr. Gavejian helps companies in all industries to assess information risk and security as part of the development and implementation of comprehensive data security safeguards including written information security programs (WISP). Additionally, Mr. Gavejian assists companies in analyzing issues related to: electronic communications, social media, electronic signatures (ESIGN/UETA), monitoring and recording (GPS, video, audio, etc.), biometrics, and bring your own device (BYOD) and company owned personally enabled device (COPE) programs, including policies and procedures to address same. He regularly advises clients on compliance issues under the Telephone Consumer Protection Act (TCPA) and has represented clients in suits, including class actions, brought in various jurisdictions throughout the country under the TCPA.

Mr. Gavejian represents companies with respect to inquiries from the HHS/OCR, state attorneys general, and other agencies alleging wrongful disclosure of personal/protected information. Mr. Gavejian negotiates vendor agreements and other data privacy and security agreements, including business associate agreements. His work in the area of privacy and data security includes counseling and coaching clients through the process of investigating and responding to breaches of the personally identifiable information (PII) or protected health information (PHI) they maintain about consumers, customers, employees, patients, and others, while also assisting clients in implementing policies, practices, and procedures to prevent future data incidents.

Mr. Gavejian represents management exclusively in all aspects of employment litigation, including restrictive covenants, class-actions, harassment, retaliation, discrimination, and wage and hour claims in both federal and state courts. Mr. Gavejian regularly appears before administrative agencies, including the Equal Employment Opportunity Commission (EEOC), the Office for Civil Rights (OCR), the New Jersey Division of Civil Rights, and the New Jersey Department of Labor. Mr. Gavejian’s practice also focuses on advising/counseling employers regarding daily workplace issues.

Mr. Gavejian’s litigation experience, coupled with his privacy practice, provides him with a unique view of many workplace issues and the impact privacy, data security, and social media may play in actual or threatened lawsuits.

Mr. Gavejian regularly provides training to both executives and employees and regularly speaks on current privacy, data security, monitoring, recording, BYOD/COPE, biometrics (BIPA), social media, TCPA, and information management issues. His views on these topics have been discussed in multiple publications, including the Washington Post, Chicago Tribune, San Francisco Chronicle (SFGATE), National Law Review, Bloomberg BNA, Inc.com, @Law Magazine, Risk and Insurance Magazine, LXBN TV, Business Insurance Magazine, and HR.BLR.com.

Mr. Gavejian is the Co-Chair of Jackson Lewis’ Hispanic Attorney Resource Group, a group committed to increasing the firm’s visibility among Hispanic-American and other minority attorneys, as well as mentoring the firm’s attorneys to assist in their training and development. Mr. Gavejian also previously served on the National Leadership Committee of the Hispanic National Bar Association (HNBA) and regularly volunteers his time for pro bono matters.

Prior to joining Jackson Lewis, Mr. Gavejian served as a judicial law clerk for the Honorable Richard J. Donohue on the Superior Court of New Jersey, Bergen County.

Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. He founded and currently leads the firm’s Privacy, e-Communication and Data Security Practice, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with…

Joseph J. Lazzarotti is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. He founded and currently leads the firm’s Privacy, e-Communication and Data Security Practice, 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, Mr. Lazzarotti 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 – Mr. Lazzarotti 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 – Mr. Lazzarotti’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.

Mr. Lazzarotti 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.

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