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The Uniform Personal Data Protection Act Is Here

In July 2021, the Uniform Law Commission (“ULC”) voted to approve the Uniform Personal Data Protection Act (“UPDPA”). The UPDPA is a model data privacy bill designed to provide a template for states to introduce to their own legislatures, and ultimately, adopt as binding law. 

The UPDPA 

The UPDPA would govern how business entities collect, control, and process the personal and sensitive personal data of individuals. This model bill has been in the works since 2019 and includes the input of advisors, observers, the Future of Privacy Forum, and other stakeholders. This is significant because the ULC has set forth other model laws, such as the Uniform Commercial Code, which have largely been adopted across the states. 

Interestingly, the model bill is much narrower than some of the recent state privacy laws that have been passed, such as the California Privacy Rights Act and Virginia’s Consumer Data Protection Act. Namely, the model bill would provide individuals with fewer, and more limited, rights including the right to copy and correct personal data. The bill does not include the right of individuals to delete their data or the right to request the transmission of their personal data to another entity.  The bill also does not provide for a private cause of action under the UPDPA itself, but would not affect a given state’s preexisting consumer protection law if that law authorizes a private right of action. If passed, the law would, consequently, be enforced by a state’s Attorney General. 

Applicability 

The UPDPA would apply to the activities of a controller or processor that conducts business in the state or produces products or provides services purposefully directed to residents of this state and: 

(1) during a calendar year maintains personal data about more than [50,000] data subjects who are residents of this state, excluding data subjects whose data is collected or maintained solely to complete a payment transaction; 

(2) earns more than [50] percent of its gross annual revenue during a calendar year from maintaining personal data from data subjects as a controller or processor; 

(3) is a processor acting on behalf of a controller the processor knows or has reason to know satisfies paragraph (1) or (2); or 

(4) maintains personal data, unless it processes the personal data solely using compatible data practices. 

The UPDPA defines “personal data” as a record that identifies or describes a data subject by a direct identifier or is pseudonymized data. The term does not include deidentified data. The bill also defines “sensitive data” as a category of data separate and apart from mere “personal data.” “Sensitive data” includes such information as geolocation in real time, diagnosis or treatment for a disease or health condition, and genetic sequencing information, among other categories of data. 

The law would not apply to state agencies or political subdivisions of the state, or to publicly available information. There are other carve-outs, as well. 

Notably, the model bill also contains several different levels of “data practices,” broken down into three subcategories: (1) a compatible data practice; (2) an incompatible data practice; and (3) a prohibited data practice. Each subcategory of data practice comes with a specific mandate about the level of consent required—or not required—to process certain data. For example, a controller or processor may engage in a compatible data practice without the data subject’s consent with the expectation that a compatible data practice is consistent with the “ordinary expectations of data subjects or is likely to benefit data subjects substantially.” Section 7 of the model bill goes on to list a series of factors that apply to determine whether processing is a compatible data practice, and consists of such considerations as the data subject’s relationship to the controller and the extent to which the practice advances the economic, health, or other interests of the data subject. An incompatible data practice, by contrast, allows data subjects to withhold consent to the practice (an “opt-out” right) for personal data and cannot be used to process sensitive data without affirmative express consent in a signed record for each practice (an “opt-in” right). Lastly, a prohibited data practice is one in which a controller may not engage. Data practices that are likely to subject the data subject to specific and significant financial, physical, or reputational harm, for instance, are considered “prohibited data practices.” 

The model bill has built in a balancing test meant to gauge the amount of benefit or harm conferred upon a data subject by a controller’s given data practice, and then limits that practice accordingly. 

What’s Next

After final amendments, the UPDPA will be ready to be introduced to state legislatures by January 2022. This means that versions of this bill can, and likely will be, adopted by several states over the next couple of years—and perhaps, eventually, lead to some degree of uniformity among the states’ privacy laws. 


Krishna A. Jani, CIPP/US, is a member of Flaster Greenberg’s Litigation Department focusing her practice on complex commercial litigation. She is also a member of the firm’s cybersecurity and data privacy law practice groups. She can be reached at 215.279.9907 or krishna.jani@flastergreenberg.com.

Cybersecurity & Data Privacy Legislative Updates

Since the passage of the CCPA in 2018, there has been a flurry of proposed state laws aimed at regulating the areas of cybersecurity and data privacy in the absence of federal comprehensive legislation. Additionally, there has been a renewed focus on legislation at the federal level. Here’s an overview of some recently proposed pieces of federal legislation, and recently proposed and passed state laws that may actually have a shot at success.

Federal Privacy Legislation

Information Transparency and Personal Data Control Act (2021)

This Act is the first of its kind to be introduced in 2021. The Act would create protections for the processing of personal information. Under the Act, businesses would be required to utilize an opt-out consent mechanism for consumers for the collection, processing, and sharing of non-sensitive information. For the collection, sale, sharing, or other disclosure of sensitive personal information, however, companies would be required to obtain an “affirmative, express, and opt-in consent” from consumers. 

The proposed law defines “sensitive personal information” as financial account numbers and authentication credentials, such as usernames and passwords; health information; genetic data; any information pertaining to children under the age of 13; Social Security numbers and any “unique government-issued identifiers;” precise geolocation information; the content of oral or electronic communications, such as email or direct messaging; personal call detail records; biometric data; sexual orientation, gender identity or intersex status; citizenship or immigration status; mental or physical health diagnoses, religious beliefs; and web browsing history and application usage history.

Notably, information that is classified as deidentified, public information, and employee data would not fall under the definition of “sensitive personal information.” Written or verbal communication between a controller and a user for a transaction concerning the provision or receipt of a product or service would also not be considered sensitive data.

Additionally, data controllers would be responsible for informing processors or third parties about the purposes and limits to the specific consent granted but would not be liable for processors’ failure to adhere to those limits.

Moreover, the law would provide additional rulemaking authority to the Federal Trade Commission to devise requirements for entities that collect, transmit, store, process, sell, share, or otherwise use the sensitive personal information of members of the public.

This Act would not provide consumers with a private right of action. Instead, it directs the Attorney General to notify controllers of alleged violations and provide them with 30 days to cure non-willful violations of this Act before commencing an enforcement action.

For more information on recently-proposed federal legislation, including those crafted to address the COVID-19 pandemic, see my pieces on the Exposure Notification Privacy Act, The Public Health Emergency Act, and the COVID-19 Consumer Data Protection Act.

State Privacy Legislation

Unlike comprehensive national laws like the GDPR, which generally applies to all data in all settings, state laws in the U.S. typically carve out exceptions for certain types of data, such as health information already subject to HIPAA, for example. The laws outlined below largely follow this pattern.

The following states have recently passed, or proposed, cybersecurity and data privacy laws.

StateLegislationStatusPrivate Right of Action
CaliforniaCalifornia Privacy Rights ActPassed by ballot initiative in November 2020Limited
VirginiaConsumer Data Protection ActSigned into on March 2, 2021No
WashingtonWashington Privacy ActPendingNo; Not in 2021 version
FloridaFlorida Privacy Protection ActPendingYes
New YorkNew York Privacy Act; Biometric Privacy ActPendingYes; Yes
OklahomaComputer Data Privacy ActPassed by HouseNo

The CPRA is a ballot initiative that amends the CCPA and includes additional privacy protections for consumers. It was passed in November 2020 and the majority of the provisions therein will enter into force on January 1, 2023 with a look-back to January 2022.

Virginia’s law is similar to the still-pending Washington Privacy Act and includes provisions that are akin to the CCPA.

Other states like Oregon and Minnesota have also proposed privacy and security legislation in recent months.

Don’t forget to catch Krishna Jani’s presentation at PBI’s upcoming Cyberlaw Update on Thursday, April 29, 2021!


Krishna A. Jani, CIPP/US, is a member of Flaster Greenberg’s Litigation Department focusing her practice on complex commercial litigation. She is also a member of the firm’s cybersecurity and data privacy law practice groups. She can be reached at 215.279.9907 or krishna.jani@flastergreenberg.com.

Disinformation, Mob Mentality, And Federal Privacy Legislation

Will the disinformation that led to a mob surrounding the Capitol Building help drive federal privacy legislation?

Here’s why I think it will.

Disinformation

It is no secret that the internet is rife with information—some legitimate, and, inevitably, some not. In many ways, social media and the rise of new and emerging platforms on which to share information, contribute to the spread of disinformation. Disinformation is false information that is intended to mislead, unlike misinformation, which is false information that is spread, regardless of intent to mislead.

Disinformation can be damaging to both individuals and businesses because it can be difficult to discern the difference between evidence-backed information and disinformation. This very issue arguably resulted in thousands of people surrounding the Capitol Building on January 6, 2021 in Washington, D.C.

The Role of the Internet and Social Media

Though many platforms likely contributed to the widespread disinformation that led to a mob storming the Capitol Building, certain platforms have a significantly greater impact. For example, with more than two billion users worldwide, Facebook has unprecedented reach, and that reach has created a near-monopoly on certain types of information and the sharing of that information. For instance, small businesses often rely on Facebook to find customers. Content creators use Facebook to create visibility for their work. Software developers seek to attract customers on the platform. Media outlets use the platform to share news articles. The list goes on.  

Platforms like Facebook employ the details of personal profiles to gauge which content it believes a particular user will find enticing. Then, the platform will calibrate the user’s feed according to this process in an effort to maximize the amount of time that the user stays online. The result is that the information that appears in our feeds is informed, to at least some degree, by what our friends and network contacts post and consume. It is shaped, by a much larger degree, by the platforms’ algorithm.

This is precisely the point at which data privacy, personal autonomy, and democracy intersect.

The Problem and Ways to Avoid the Spread of Disinformation

Disinformation can harm businesses in a myriad of ways. Incorrect news, negative social media posts, and even overtly false consumer reviews can adversely impact a company’s bottom line.

Successful companies understand their markets, their customers, and their partners. They also need to understand how their brand is perceived by users of social media. This can be achieved by using in-house technology or hiring an outside firm. By doing so, companies can get advance warning of an individual’s or group’s efforts to spread disinformation about a given brand. To the extent a business participates in e-commerce and has a social media presence, the business should aim to establish verified accounts on major platforms and use them regularly to establish their markets.

Other tools businesses can use to avoid the spread of disinformation are: self-assessing, preparing for incident response, and communicating directly with their customers. In addition, data ethics should be incorporated into decision-making along with business motivation, technological practicality, and legal compliance.

How Federal Privacy Legislation Could Help

The federal government has no organization to regulate or help quell the spread of disinformation, and there is no one particular person within the government in charge of an overall disinformation policy. The United States needs a comprehensive approach to risk generated by data. Accordingly, any effective federal privacy regime must take into account the process of data throughout the whole lifecycle of data governance.

The business industry has plenty of reasons to support federal privacy legislation. For one, a single piece of comprehensive legislation reduces confusion surrounding compliance. Second, one law to rule them all would likely preempt many of the piecemeal legislative efforts of various states. Lastly, in the wake of the Schrems II decision, passing a commercial privacy law would help the atmosphere considerably as negotiations go forward with the European Union with regard to transborder data flows.

It is also worth noting that some of the largest markets in the world are moving toward comprehensive data protection laws, such as China, India, Brazil, and Canada. The adoption of a similar comprehensive law in the United States would solidify the United States’ position as a world leader in data privacy.

The goal of any federal privacy legislation should be to preserve the most beneficial aspects of social media platforms while simultaneously protecting individuals and businesses from the platforms’ more harmful impacts. Most pending federal legislation include the basics: data access, deletion rights, and portability. The next steps will be to incorporate protections against disinformation.

Krishna A. Jani is a member of Flaster Greenberg’s Litigation Department focusing her practice on complex commercial litigation. She is also a member of the firm’s cybersecurity and data privacy law practice groups. She can be reached at 215.279.9907 or krishna.jani@flastergreenberg.com.

Cybersecurity & Data Privacy Updates, Part II

From California to New York, data privacy laws and enforcement actions are ramping up. Check out some highlights below.

1. New York State Department of Financial Services launched its first enforcement action in July 2020.

As U.S. companies focus on CCPA enforcement, they should not ignore other state laws and accompanying regulations. The New York Department of Financial Services’ Cybersecurity Requirements for Financial Services Companies (“DFS’s Cybersecurity Regulation”) first took effect on March 1, 2017.

Recently, cybercriminals have sought to exploit technological vulnerabilities to gain access to sensitive electronic data.  In an effort to combat such exploitation, this regulation requires each company to assess its specific risk profile and design a program that addresses its risks in a vigorous way. Senior management are encouraged to take this issue seriously. They must ensure that someone is responsible for the organization’s cybersecurity program and file an annual certification confirming compliance with these regulations. A regulated entity’s cybersecurity program must ensure the safety and soundness of the institution and protect its customers.

On July 22, 2020, the New York Department of Financial Services announced cybersecurity charges against First American Title Insurance Company for exposing millions of documents with consumers’ nonpublic personal information over the course of several years, including bank account numbers, mortgage and tax records, Social Security Numbers, wire transaction receipts, and drivers’ license images.

This marks the first cybersecurity enforcement action filed by the Department. The hearing will take place at the office of the New York State Department of Financial Services beginning on October 26, 2020.

2. What is The California Privacy Rights Act of 2020—“CCPA 2.0?”

If you’re thinking, “Wait! Didn’t the California Consumer Privacy Act (“CCPA”) just go into effect?” You’re right. The CCPA took effect on January 1 of this year, and enforcement actions began on July 1. Already, a privacy advocacy group, California for Consumer Privacy, collected 900,000 signatures to place the California Privacy Rights Act (“CPRA”) on the November 2020 ballot. According to several news sources, current polling suggests that the bill will pass.

The CPRA seeks to, among other things, establish the California Privacy Protection Agency (“CPPA”), a new privacy enforcement authority, similar to the Data Protection Authority put in place in the European Union by the General Data Protection Regulation (“GDPR”). This Agency will be empowered to fine transgressors, hold hearings about privacy violations, and clarify privacy guidelines.

In addition, the law would establish a new category of sensitive personal information, including Social Security numbers, precise geolocation data, biometric or health information, and more. It would also give consumers greater power to restrict the use of such data. The law would also add email addresses and passwords to the list of items covered by the “negligent data breach” section to help curb identity theft.

3. The Connecticut Insurance Data Security Law goes into effect on October 1, 2020.

The Act establishes standards applicable to licensees of the Connecticut Insurance Department for data security, the investigation of a cybersecurity event, and notification to the Department of such event. In preparation for this law to take effect, Connecticut’s Insurance Department issued a Bulletin on July 20, 2020 to all licensees of the Department.

Licensed insurance companies, and any other companies otherwise authorized to operate pursuant to the insurance laws of Connecticut, should be aware of and follow the guidelines laid out in the Bulletin.

The attorneys at Flaster Greenberg are following developments related to the COVID-19 Pandemic and formed a response team and to work with businesses to keep them up-to-date on developments that impact their business. If you have any questions on the information contained in this blog post, please feel free to reach out to Donna UrbanKrishna Jani, or any member of Flaster Greenberg’s Telecommunications or Privacy & Data Security Groups. 

COVID-19 RESOURCE PAGE

To serve as a central repository of information and contributions from Flaster Greenberg attorneys on legal developments during the COVID-19 crisis, we have launched a COVID-19 Resource page on our website. Feel free to check back frequently for Flaster Greenberg’s ongoing analyses of important legal updates that may affect you or your business.

Cybersecurity & Data Privacy Updates

cybersecurity and data privacy updates

There is a lot going on in the world right now—and the world of data privacy is no exception.

Here is a snapshot of what’s on our radar:

1. Senators Jeff Merkley and Bernie Sanders introduced the National Biometric Information Privacy Act of 2020 on Tuesday, August 4, 2020.

This legislation would, among other things, prohibit private companies from collecting biometric data—including eye scans, voiceprints, faceprints, and fingerprints—without consumers’ and employees’ consent, or profiting from this data. This introduction comes amid growing concerns over the prevalence of biometric data collection among private companies, including the use of facial recognition technology.

This legislation limits the ability of companies to collect, buy, sell, lease, trade, or retain individuals’ biometric information without specific written consent, and requires private companies to disclose to any inquiring individual the information the company has collected about that individual. Importantly, this bill would allow individuals and State Attorneys General to bring lawsuits against companies that fail to comply.

2. Several United States Senators have urged Congress to include the privacy protections contained in the Public Health Emergency Act into any new stimulus package.

On July 28, 2020, several U.S. senators drafted a letter addressed to senate leaders urging them to include the privacy protections contained in the Public Health Emergency Privacy Act in any forthcoming stimulus package.

The senators emphasized the need for commonsense privacy protections for COVID data because “public trust in COVID screening tools will be essential to ensuring meaningful participation in such efforts.” Research shows that many Americans are hesitant to adopt COVID screening and tracing apps due to privacy concerns; therefore, the lack of health privacy protections could significantly undermine efforts to contain this virus and safely reopen—“particularly with many screening tools requiring a critical mass in order to provide meaningful benefits.”

As the drafters point out, “health data is among the most sensitive data imaginable and even before this health emergency, there has been increasing bipartisan concern with gaps in our nation’s privacy laws.” The drafters believe these common-sense protections are critical in quelling the spread of COVID-19 while at the same time protecting sensitive health and geolocation information.

We will continue to track this legislation and provide updates as they become available.

3. Schrems II invalidated the EU-US Privacy Shield.

On July 16, 2020, the Court of Justice of the European Union issued a decision in Data Protection Commission v. Facebook Ireland, Schrems. The decision, known as Schrems II, invalidated the European Commission’s adequacy decision for the European Union-United States (EU-US) Privacy Shield framework, which is critical for more than 5,000 United States based companies that conduct trans-Atlantic trade in compliance with EU data protection rules.

The Court found the European Commission’s adequacy determination for the Privacy Shield invalid for two primary reasons: (i) the US surveillance programs, which the commission addressed in its previously-issued Privacy Shield decision, are not limited to what is strictly necessary and proportional as required by EU law; and (ii) with regard to US surveillance, EU data subjects lack actionable judicial redress and, therefore, do not have a right to an effective remedy in the US, as required by the EU Charter.

The Schrems II decision requires both data importers and data exporters to be reasonably certain that they can comply with their obligations in the Standard Contractual Clauses. Where they cannot comply, importers and exporters should likely stop transferring data, forcing some companies into data localization. Schrems II addresses a long-running series of issues regarding the appropriate role of surveillance in our society and its inevitable clash with privacy.

This decision also influences data flows across nations. Some data privacy professionals believe that we are moving away from global data flows and moving towards more fragmented data flows. This shift could have a particularly significant impact on e-commerce. For more, see the Court of Justice of the European Union’s Press Release on this decision.

The attorneys at Flaster Greenberg are following developments related to the COVID-19 Pandemic and formed a response team and to work with businesses to keep them up-to-date on developments that impact their business. If you have any questions on the information contained in this blog post, please feel free to reach out to Donna Urban, Krishna Jani, or any member of Flaster Greenberg’s Telecommunications or Privacy & Data Security Groups. 

COVID-19 RESOURCE PAGE

To serve as a central repository of information and contributions from Flaster Greenberg attorneys on legal developments during the COVID-19 crisis, we have launched a COVID-19 Resource page on our website. Feel free to check back frequently for Flaster Greenberg’s ongoing analyses of important legal updates that may affect you or your business.

 

Tips On Protecting Your Virtual Meetings To Avoid A Cyber Security Breach

Computer Hacker

Virtual Meetings, and their Unintended Vulnerabilities

Advanced technology and the availability of online video and teleconferencing software has certainly helped ease the transition to working remotely for many businesses, schools, health care providers, and even the Courts. However, these virtual meeting platforms, while increasingly popular and essential especially during the COVID-19 pandemic, are not always completely secure.

Over the past few days, you may have seen the term “Zoom-Bombing” circulating around the news. This term refers to nefarious actors, or trolls, on the web hijacking Zoom and other virtual meetings to display a variety of disruptive, and often disturbing, behavior. This computer hacking creates serious privacy concerns as it exposes confidential and sensitive material, such as medical information, financial data, trade secrets, and other proprietary information, to these intruders and other third parties.

Protect Your Meetings from Uninvited Guests

We suggest taking the following steps to help keep your virtual meetings closed to intruders:

  • Create a random or randomly-generated meeting number for each meeting. Zoom, and other virtual meeting platforms such as GoToMeeting or Skype for Business, allow for a standing meeting number but reports have indicated that such standing meeting numbers are being sold on the dark web. In at least one instance, stolen account information such as email addresses, passwords, meeting identifications, type of account, host keys, and names were actively being sold or posted to the dark web. In other instances, sensitive information from virtual meetings was discoverable through a search engine on the open web. Even a United States healthcare provider, seven educational institutions, and one small business were targeted in such virtual meeting cyberattacks.
  • Ensure that each meeting is password-protected. For example, Zoom can automatically create a password and does with each new meeting. In the alternative, when creating the invitation, the meeting creator can assign a password in the invitation. The password will then be included in the meeting invitation that is sent out to the attendees.
  • Lock virtual meetings once they’re in session. Some virtual platforms allow for meeting creators to lock their meetings once they’re in session. To prevent unexpected attendees from joining a current session, lock your meeting or enable a virtual waiting room. You’ll be notified when an attendee attempts to join and can easily connect all waiting attendees to the meeting by unlocking.

These precautions should help keep your virtual meetings free from any unwanted “Zoom-Bombers.”

Further Guidance

To further address these emerging privacy concerns, on April 8th, Senator Edward Markey, whose priorities include telecommunications, technology, and privacy policy, urged the Federal Trade Commission to publish industry cybersecurity guidelines for online conference providers for protecting consumers’ privacy.

If you have any questions, please feel free to reach out to Donna Urban, Krishna Jani, or any member of Flaster Greenberg’s Telecommunications or Privacy & Data Security Groups.  

Donna T. Urban is a member of Flaster Greenberg’s Commercial Litigation and Environmental Law Departments concentrating her practice in telecommunications law, environmental regulation and litigation, and privacy and data security. She is a seasoned litigator, and for more than 20 years has successfully represented business clients in contract disputes, regulatory matters, and complex negotiations. She can be reached at donna.urban@flastergreenberg.com or 856.661.2285.

Krishna A. Jani is a member of Flaster Greenberg’s Litigation Department focusing her practice on complex commercial litigation. She is also a member of the firm’s cybersecurity and data privacy law practice groups. She can be reached at 215.279.9907 or krishna.jani@flastergreenberg.com.

To serve as a central repository of information and contributions from Flaster Greenberg attorneys on legal developments during the COVID-19 crisis, we have launched a COVID-19 Resource Page on our website.  Feel free to check back frequently for Flaster Greenberg’s ongoing analyses of important legal updates that may affect you or your business. 

 

 

Pennsylvania’s Business Relief Efforts in the Wake of COVID-19

Pennsylvania State Capitol

In the past few weeks, the Commonwealth of Pennsylvania has put forth several relief efforts directed towards businesses in an effort to alleviate the strain caused by the outbreak of COVID-19 or coronavirus.

Governor Wolf’s Disaster Relief Order

On March 6th, Pennsylvania Governor Tom Wolf issued an Executive Order mandating business closures throughout the Commonwealth to mitigate the risk of spreading coronavirus, or his “Disaster Declaration Order.” As a part of that Order, the Governor allowed for greater flexibility in a variety of industries. For example, the Order allowed for greater flexibility in the application of state and federal motor carrier regulations to accommodate truck drivers involved in emergency activities during this time. Accordingly, the Governor directed the Commonwealth Department of Transportation to waive or suspend any laws, or federal or state regulations, related to the drivers of commercial vehicles.

Moreover, both Governor Wolf and Rachel Levine, MD, Secretary of Health, have ordered that life-sustaining businesses and services (as outlined in this list) may continue to maintain in-person operations, but that other non-essential businesses such as gyms, salons and spas, casinos, concert venues, theatres, bars, sporting event facilities, golf courses, and non-essential retail facilities like shopping malls (except for pharmacies or other health care facilities located therein) must shut down. Liquor stores were also ordered to shut down pursuant to the orders, though grocery stores with Pennsylvania Liquor Control Board licenses may still sell wine and beer. Restaurants are permitted to remain open for carry-out and delivery only. Enforcement actions against businesses that do not close their physical locations began at 8:00 a.m. on March 23rd.

Business Exemption Options

Businesses may seek a waiver or exemption to the closure order by using Pennsylvania’s Department of Community and Economic Development’s (DCED) Business Exemption Form. Among other things, the form asks how the business seeking the exemption meets the definition of “life-sustaining.” Furthermore, it asks whether the business has a plan to meet Center for Disease Control (CDC) recommended guidelines to maintain employee safety during the COVID-19 pandemic. Businesses seeking an exemption should be mindful of the CDC’s guidance on the limitation on the number of persons permitted to be in one work space, and be ready to answer the above questions. Once an exemption form has been submitted, decisions will be communicated by email. In making its decisions, the Commonwealth will seek to balance public health, safety, and the security of its industry supply chains supporting life-sustaining businesses.

Additional Resources for Business Relief

Businesses that do not wish to seek, or do not qualify for, a business exemption have other sources of financial relief available. For example, the Pennsylvania DCED offers working capital loans that could be of assistance to businesses impacted by COVID-19. DCED resources and information will be posted to its website as they become available.

The United States Small Business Administration (SBA), in addition to local funding partners, may also be a source of assistance for affected businesses. The SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they may be experiencing. These loans may be used to pay fixed debts, payroll, accounts payable, and other bills that are not being paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.

Moreover, the Commonwealth just created a portal for manufacturers, distributors, and other suppliers to upload information about supplies available for purchase so that the Commonwelath can efficiently procure these supplies for hospitals and other medical facilities across Pennsylvania. Notably, this includes any manufacturers that can shift their production to produce personal protective equipment (PPE) such as protective clothing, helmets, gloves, face shields, goggles, facemasks and/or respirators or other equipment designed to protect the wearer from injury or the spread of infection or illness (e.g., specialized sewing companies).

The Commonwealth has also decided that businesses that are temporarily closed due to COVID-19 will be granted Relief from Charges for any benefits received by a former employee who files for unemployment compensation, and their tax rates will not be increased because of COVID-19 related claims. Additionally, the Pennsylvania Department of Labor and Industry has programs to assist businesses impacted by COVID-19. The Shared Work Program, for example, can help keep employees attached to a business’s workplace by allowing an employer to temporarily reduce work hours rather than resorting to layoffs.

If a business has had to close temporarily, consider layoffs, or is financially at-risk for permanent closure, the Rapid Response Assistance Program is available to assist it with a variety of services and resources to help it. The Response Team is also available to assist employees. Moreover, the Commonwealth offers Local Assistance Partners so that businesses can contact them to discuss the impact of the coronavirus on their daily operations.

COVID-19 Working Capital Access Program

The COVID-19 Working Capital Access (CWCA) Program is administered by the Pennsylvania Industrial Development Authority (PIDA) and provides critical working capital financing to small businesses located within the Commonwealth that are adversely impacted by the COVID-19 outbreak. Importantly, there are no loan repayments required for the first 12 months.

All CWCA loan applications must be submitted through a Certified Economic Development Organization (CEDO). An eligible small business enterprise is a for-profit, limited liability company, partnership, proprietorship, or other legal business entity located in Pennsylvania, and having 100 or fewer full-time employees worldwide at the time of submission of the application. There will be a limit of $100,000 for each loan. The interest rate for such loans is 0%, except for agricultural producers, for whom the interest rate is 2%.

Philadelphia Small Business Relief Fund

The Philadelphia Small Business Relief Fund, jointly administered by the Department of Commerce (DOC) and the Philadelphia Industrial Development Corporation (PIDC), offers grants or zero-interest loans to Philadelphia small businesses impacted by the COVID-19 pandemic. The program aims to provide relief to small businesses in order to help them survive this crisis, retain as many employees as possible, help businesses avoid predatory lenders, and maintain the provision of goods and services for Philadelphia’s residents.

This is a three-tiered fund. Accordingly, the particular relief that a business qualifies for depends on its revenue level as follows:

  • Microenterprise Grants: Businesses are eligible for up to $5,000 per business for businesses with less than $500,000 in annual revenue.
  • Small Business Grants: Businesses are eligible for up to $25,000 per business for businesses with annual revenue between $500,000 and $3,000,000.
  • Small Business Zero-Interest Loans: Businesses are eligible for up to $100,000 per business for businesses with annual revenue between $3,000,000 and $5,000,000.

Businesses could have applied for all three tiers prior to Mayor Kenney’s announcement yesterday. Applications will be reviewed on a rolling basis once all materials are received and determinations should take about two weeks.

On Monday, March 30, Mayor Kenney announced that due to high demand and limited resources, the Philadelphia COVID-19 Small Business Relief Fund will not accept applications for the small business grants program or the small business zero interest loan program after 5:00 p.m. yesterday evening. Only applications for the microenterprise grant program, which provides $5,000 grants to small businesses, will be accepted after yesterday’s deadline.

Pennsylvania Industrial Development Authority

The Pennsylvania Industrial Development Authority’s currently putting together the Small Business First Fund to make $61,000,000 available for business assistance (see above). Funds can be used for working capital loans of up to $100,000 given to small businesses (and maybe nonprofits) who employ 100 or fewer people. Currently, the interest rates are set at 3% but the PIDA board has the authority to adjust the interest rates as low as 0%.

PIDA also provides low-interest loans and lines of credit for eligible businesses that create and retain full-time jobs for the development of industrial parks and/or multi-tenant facilities.

KIVA

Kiva is a nonprofit organization that gives entrepreneurs access to 0% interest small business loans through a crowdfunding platform.

FINANTA

FINANTA, short for FINANcing and Technical Assistance, is a nonprofit lending institution facilitating access to capital and/or consultation services for consumers, entrepreneurs, and first-time homebuyers in the Philadelphia region. FINANTA gives entrepreneurs affected by COVID-19, and other emergencies, loans that can range from $5,000 to $15,000 without closing fees. For more information about the loans or to apply, call 267-236-7030.

As businesses face the economic pressure caused by these uncertain times, they may be forced to make tough decisions to respond to these unprecedented challenges. If you or your client have any questions regarding the funds available, or how to weather this storm, you should consider contacting experienced legal counsel to assist you in this constantly changing area as soon as practical. Flaster Greenberg’s attorneys are available to discuss the available options at your convenience.

This blog post is part of Flaster Greenberg’s efforts to keep its clients and friends advised of the multitude of responses to the COVID-19 outbreak. The post can be found here and will be continually updated. If you have specific questions, or for more details on any of the above, please contact Krishna Jani, Doug Stanger, Damien Tancredi, or any member of Flaster Greenberg’s Corporateor Bankruptcy Departments.

COVID-19 RESOURCE PAGE

To serve as a central repository of information and contributions from Flaster Greenberg attorneys on legal developments during the COVID-19 crisis, we have launched a COVID-19 Resource page on our website. Feel free to check back frequently for Flaster Greenberg’s ongoing analyses of important legal updates that may affect you or your business.

4 Ways To Keep Your Business Secure During The COVID-19 Pandemic

Cyber security concept businessman Lock on digital screen, contrast, virtual screen with a consultant doing presentation in the background Closed Padlock on digital, cyber security, key WannaCrypt

On Wednesday, March 11, 2020, the World Health Organization declared the outbreak of the coronavirus to be a pandemic. This is significant for several reasons. The first is that the way we interact has drastically, and must necessarily, change because of the contagiousness of the coronavirus and its effect on public health. Secondly, a public health scare such as this can adversely affect the health of a business’s cybersecurity and data privacy. Hackers and other cyber threat actors are capitalizing on the global concern over COVID-19. For example, Check Point researchers found that coronavirus-themed domains are over fifty (50) times more likely to be malicious than other domains and over 4,000 coronavirus-related domains have been registered since January 2020. In fact, a malicious website purporting to be the live map for COVID-19 global cases run by Johns Hopkins has been found to be circulating.

What does all of this mean? It means that your business, including your employees and clients, could be in danger if you don’t take precautionary measures to prevent the risk of a data breach.

How can small and mid-size businesses adapt quickly to ensure effective cybersecurity and data privacy protection right now? If your workforce has gone largely remote, you should focus your cybersecurity and data privacy efforts mainly on the following four areas most susceptible to a breach. This may help to mitigate the risk of a breach actually happening and limit any potential liability.

Below are four ways to keep your business safe from hackers and data breaches during this tumultuous time:

  1. Email Security
    • Make sure you and your staff know how to keep your email secure. Avoid opening emails, downloading attachments, or clicking on suspicious links sent from unknown or untrusted sources.
    • Verify unexpected attachments or links from people you know by contacting them through another method of communication like a phone call or text message.
    • Do not provide personal information to unknown sources like passwords, birthdates, and especially, social security numbers.
    • Be especially cognizant of emails with poor design, grammar, or spelling as this can be a sign of a phishing attempt.
  2. Password Protection and Multi-Factor Authentication
    • Use strong passwords on all of your accounts, and encourage your staff to do the same.
    • Avoid easy-to-guess words like names of pets, children, and spouses as well as common dates like birthdays.
  3. Web Safety
    • As noted above, there has been a massive influx of fake websites, whose creators are looking to take advantage of the fear surrounding the coronavirus.
    • Make sure that any websites that require the insertion of account credentials like usernames and passwords, along with those used to conduct financial transactions, are encrypted with a valid digital certificate to ensure your data is secure. Secure websites like these will typically have a green padlock located in the URL field and will begin with “https.”
    • While your workforce is working remotely, ensure that they are not using public computers and/or logging into public Wi-Fi connections to log into accounts and access sensitive information.
    • You may want to connect with an IT company or your in-house IT department to implement ad-blocking, script-blocking, and coin-blocking browser extensions to protect systems against malicious advertising attacks and scripts designed to launch malware.
    • Sign out of accounts and shut down computers and mobile devices when not in use.
  4. Device Maintenance 
    • Keep all hardware and software updated with the latest, patched version.
    • Run reputable antivirus or anti-malware applications on all devices and keep them updated with the latest version.
    • Create multiple, redundant backups of all critical and sensitive data and keep them stored off the network in the event of a ransomware infection or other destructive malware incident. This will allow you to recover lost files, if needed.

Lastly, if your business is not already protected by a cyber-insurance policy, now may be the time to consider obtaining coverage.

Small and mid-size businesses in the Delaware Valley should consider implementing the above cybersecurity and data privacy measures while adapting to a shifting health and security landscape in the wake of the coronavirus.

Stay safe, everyone!

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Krishna A. Jani
is a member of Flaster Greenberg’s Litigation Department focusing her practice on complex commercial litigation. She is also a member of the firm’s cybersecurity and data privacy law practice groups. She can be reached at 215.279.9907 or krishna.jani@flastergreenberg.com.

To serve as a central repository of information and contributions from Flaster Greenberg attorneys on legal developments during the COVID-19 crisis, we have launched a COVID-19 Resource Page on our website.  Feel free to check back frequently for Flaster Greenberg’s ongoing analyses of important legal updates that may affect you or your business. 

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