The leaders of our Wage & Hour Practice, Justin Barnes Jeffrey Brecher and Eric Magnus collaborated with us on this article.

According to reports, Kronos, the cloud-based, HR management service provider, suffered a data incident involving ransomware affecting its information systems. Kronos communicated that it discovered the incident late on Saturday, December 11, 2021, when it “became aware of unusual activity impacting UKG solutions using Kronos Private Cloud.”   Shortly after,  Kronos issued a helpful Q & A for customers impacted by the incident. The company confirmed:

[T]his is a ransomware incident affecting the Kronos Private Cloud—the portion of our business where UKG Workforce Central, UKG TeleStaff, Healthcare Extensions, and Banking Scheduling Solutions are deployed. At this time, we are not aware of an impact to UKG Pro, UKG Ready, UKG Dimensions, or any other UKG products or solutions, which are housed in separate environments and not in the Kronos Private Cloud.

This incident has already impacted time management, payroll processing, and other HR-related activities of organizations using the affected services. Ransomware and similar attacks also could compromise confidential and personal information maintained on affected systems, although there is no indication of that at this point. Clearly, organizations that use these services can be affected in several ways. The FAQs below provide information on some of the key issues these organizations should be thinking about.

Isn’t this really Kronos’ problem?

This certainly is a significant issue for Kronos and, based on communications from Kronos, the company is in the process of remediating the incident and alerting its impacted customers. However, because of the nature and extent of the services Kronos provides to its customers (i.e., employers), there are several issues that HR, IT and other groups inside organizations that are customers of the affected services need to be doing. We address some of those items below.

From a communications perspective, this incident likely will receive significant news coverage, prompting questions from employees about the impact of the incident on their personal information, their schedules, their pay, etc. Employers will need to think carefully about how to respond to these inquiries, especially when there is little known at this point about the incident.

From a compliance perspective, employers should be reviewing and implementing their contingency plans depending on the scope of services received from Kronos. For example, clients using Kronos time management systems should be evaluating what measures they should be implementing to ensure their employees’ time is properly captured and paid. A company has a legal obligation to accurately track hours worked, regardless of whether their third-party vendor (like Kronos) responsible for the task can do so or not. Clients might want to institute, in the short-term, paper timekeeping and tracking systems to ensure that employees are taking appropriate breaks and being paid for all time worked. It would be especially helpful in this situation to have employees sign off that the amount of time they report and the breaks they took are accurate.

From a cybersecurity standpoint, the answer to the question of whether this is only Kronos’ problem likely is no. All 50 states, as well as certain cities and other jurisdictions, have breach notification laws. If there is a breach of security under those laws, there may be a notification obligation. The notification obligation to affected individuals largely rests with the owner of that information, which likely would be employers. We anticipate that if notification is required, Kronos may take the lead on that, although employers will want some assurances that notification will be provided in a time and manner consistent with applicable law.

What should we be doing?

There are several steps employers likely will need to take in response to this incident, not all of which are clear at this point because of what little is currently known. Still, there are some action items affected employers should be considering:

  • Stay informed. Closely follow the developments reported by Kronos, including coordinating with your HR and IT teams.
  • Consult with counsel. Experienced cybersecurity and employment counsel can help employers properly identify their obligations and coordinate with Kronos, as needed.
  • Communicate with employees. Maintaining accurate and consistent communications with employees is critical, especially considering a significant part of the discussions around this incident could be taking place in social media. Your employees and their representatives, where applicable, may already be aware of this incident. To be prepared to address and respond to employee concerns, organizations should consider providing an initial short summary of the incident to potentially impacted individuals as soon as possible. That communication could be expanded over time with more information as it come available, perhaps in the form of FAQs like these. Less is more on the initial communication, again, given what little is known. However, it is important to let employees know the organization is aware of the incident and actively taking steps to mitigate its effects on employees.
  • Review Your Kronos Services and Service Agreement. Begin evaluating the services that the organization receives from Kronos. This will help to implement contingency plans, but also to assess the nature and extent of the information that Kronos maintains on the organization’s behalf. The organization might be able to conclude early on that, while there may be impacted systems and operations, Kronos was not in possession of the kind of personal information pertaining to employees of the organization that could lead to a breach notification obligation. This information could be reassuring for employees. Also, review the services agreement between the organization and Kronos as it may include provisions that have particular relevance here. For example, the agreement may outline a process agreed to between the parties for handling data incidents like this.
  • Review your cyber insurance policy. It might be premature to make a claim against the organization’s cyber policy, assuming the organization has a cyber policy – an important consideration nowadays. But, key stakeholders should review the situation and discuss potential coverage options with the organization’s insurance broker and/or legal counsel. Becoming more familiar with existing cyber insurance policies and coverage is prudent as it might cover some of the costs an organization incurs in connection with incidents like this.
  • Evaluate vendors. What some are asking may have led to the Kronos incident is the “Log4j” vulnerability, however, that has not been confirmed at this time. Log4j is described as a Java library for logging error messages in applications. Because other vendors also may have Log4j exposure, organizations may want to use this incident as a reason to examine more closely the data privacy and security practices of other third-party vendors, regardless of whether the Log4j vulnerability was exploited here. This is particularly the case for those vendors that handle the personal information of employees and customers.
  • Revisit your own data security compliance measures. Organizations also should check their own systems for Log4j and other vulnerabilities and fix them as quickly as possible.

Will the state breach notification laws apply?

We do not know if there has been a “breach” at this point. This will require investigation and analysis of the incident, which we understand is underway at Kronos at this time. However, if the incident affects certain unencrypted personal information of individuals, such as names coupled with social security numbers, drivers’ license numbers, financial account numbers, medical information, biometric information or certain other data elements, state breach notification laws may apply. Organizations that utilize Kronos’ services globally must consider a broader definition of personal data, such as under the General Data Protection Regulation (GDPR).

Thousands of organizations have suffered similar attacks, all of which illustrate the importance of planning for a response, not only trying to prevent one. Third party service providers play important roles for most organizations, particularly with regard to their HR systems and corresponding operations. It will take some time to work through this incident, but it should be a reminder for all affected organizations to continue to develop, refine, and practice their contingency 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.

Photo of Jason C. Gavejian Jason C. Gavejian

Jason C. Gavejian is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. and co-leader of the firm’s Privacy, Data and Cybersecurity practice group. Jason is also a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy…

Jason C. Gavejian is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. and co-leader of the firm’s Privacy, Data and Cybersecurity practice group. Jason is also a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals.

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

Jason’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.). Jason 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, Jason 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.

Jason represents companies with respect to inquiries from the HHS/OCR, state attorneys general, and other agencies alleging wrongful disclosure of personal/protected information. He 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.

Jason 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. He 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. Jason’s practice also focuses on advising/counseling employers regarding daily workplace issues.

Jason’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.

Jason 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.

Jason is the co-leader 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. He 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, Jason served as a judicial law clerk for the Honorable Richard J. Donohue on the Superior Court of New Jersey, Bergen County.