In an age where companies collect, process and share customer data on a global scale, legal compliance has become even more paramount. Recently, the General Data Protection Regulation (GDPR) came into effect in the European Union (EU) and businesses have been scrambling to ensure they are compliant. However, what about businesses elsewhere in the world? How does GDPR’s cross-border effects impact them? And how does it differ from, for example, HIPAA compliance? This article seeks to shed light on these questions and more, providing guidance for global businesses’ legal compliance.
HIPAA and GDPR: A Primer
HIPAA, short for the Health Insurance Portability and Accountability Act, is a set of laws that were passed in 1996 to maintain and protect the privacy and security of individuals’ health information. HIPAA applies specifically to the healthcare industry in the United States, imposing standards and guidelines on the collection, processing, and sharing of Personal Health Information (PHI).
On the other hand, the GDPR was adopted in 2018 and applies to all businesses operating within the EU (including those outside of the EU that process EU citizens’ data) and regulates all aspects of data privacy, including the collection, processing and sharing of personal data. The GDPR replaces the EU’s Data Protection Directive of 1995 and marks a significant step forward for data privacy regulation.
Similarities and Differences – HIPAA and GDPR
Both HIPAA and GDPR require organizations to conduct a risk assessment on the data that they process, identify and document potential vulnerabilities, and implement administrative, technical and physical safeguards to protect individuals’ data. They also both require notification in case of data breaches.
The key difference between the two is the extent of data protection. As mentioned earlier, HIPAA is specific to the healthcare industry and only covers PHI data. The GDPR, however, mandates protection for all personal data of EU residents. Because of this, GDPR compliance requirements are much broader and more nuanced than HIPAA compliance obligations.
For instance, under the GDPR, individuals have the right to request access to their data, rectify or erase it and restrict its processing. Organizations are also prohibited from processing individuals’ data without obtaining explicit consent from them except in certain circumstances. Under HIPAA, these rights (or “data subject rights” as they’re called under GDPR) are limited.
Global Impact of GDPR
One of the most significant aspects of the GDPR is its extraterritorial reach. Any company operating within or outside of the EU that processes EU citizens’ data must comply with the GDPR, regardless of whether they have a juridical presence in the EU. This means even smaller companies without EU physical locations must adhere to GDPR or potentially face steep fines.
Moreover, the GDPR has ushered in a new era of heightened data privacy and security standards. Similarly, other countries have started to take notice and have introduced their own privacy laws to bring them up to par with GDPR. For example, in 2020 the California Consumer Privacy Act (CCPA) came into force, similarly imposing obligations on companies processing Californian residents’ personal data.
Tips for Global Businesses’ Legal Compliance
With increasingly complicated legal compliance requirements, companies must adapt to stay on the right side of the law. Here are some tips for global businesses:
1. Educate your team – Train your employees, in legal compliance to ensure they understand the requirements and obligations of the company.
2. Conduct a data audit – Identifying what personal data is held within the company can help form a risk assessment and guide compliance.
3. Put in place an incident response plan – Having a plan in place to effectively respond to data breaches can minimize the impact on the company and protect customer data.
4. Partner with a trusted legal expert – Given the complexity of the regulations spanning across multiple regions, it is often useful to work with an expert, particularly when new legislation arises.
As businesses continue to collect, process and share customer data, legal compliance remains a critical component of their operations. GDPR puts more onus and accountability on companies than almost any other data privacy regulation to date, but companies that were already HIPAA compliant are in a strong position to meet GDPR standards. By partnering with legal experts and developing a robust data protection strategy, businesses can remain compliant with the evolving landscape of data privacy and avoid substantial financial repercussions.