Key Takeaways

• Employee data breaches are increasingly common, with human error being the primary cause.
• New York’s SHIELD Act and New Jersey’s Identity Theft Prevention Act create specific legal obligations for employers.
• Proper safeguards need collaboration between HR, legal, and IT departments.
• Regular training, secure platforms, and limited personal device access are essential protective measures.
• Swift, transparent response to breaches minimizes both legal exposure and employee trust damage.
• Annual policy reviews are necessary to maintain compliance with evolving privacy regulations.

Why Do Employers Need to Protect Employee Data?

If you’re an employer, you have a responsibility to handle and safeguard your employees’ data, just by virtue of employing someone. It’s a growing compliance concern for employers across states like New York and New Jersey. So much personal data is shared across onboarding platforms, internal systems, and remote devices these days. This puts companies under increasing pressure to handle employee information securely and lawfully.

I’m Ty Hyderally, an employment attorney licensed in NJ and NY. I’d like to use this post to explain why employee data privacy is rising to the forefront of workplace risk management. We’ll also discuss local laws that apply, and practical steps you can take right now.

Why Are Employers Increasingly Focused on Employee Data Privacy Concerns?

The rise in workplace data breaches forced employers to reevaluate how they collect, store, and use employee information. HR directors and business owners often ask me, “Are data breaches really that serious?”

In a recent survey:

• 13% of employees reported being directly affected by a data breach at work.
• 24% said their experience with an employer raised serious concerns about data privacy.
• 31% of HR managers admitted their companies lack adequate safeguards for employee data.

As an employer, you’re handling sensitive information like Social Security numbers, banking details, and background check data. If any of that is compromised, the fallout can include identity theft, regulatory investigations, and a loss of trust. Preventing that isn’t just an option; it’s a necessity.

What Employee Data is Most Vulnerable to Privacy Breaches?

Throughout the employment lifecycle, businesses collect and store large amounts of personal information. Many of my clients wonder, “What specific types of employee data do breaches target?” Some of the most common include:

• Contact information and home addresses
• Social Security and tax identification numbers
• Bank account details for direct deposit
• Health and insurance-related disclosures
• Background check results and employment eligibility documents

Much of this data is collected when onboarding a new employee, and it’s a serious vulnerability. 67% of HR professionals reported using email or text to gather sensitive documents. That adds tons of unnecessary risk.

What Are the Common Causes of Employee Data Breaches in the Workplace?

Most breaches aren’t caused by sophisticated cybercriminals, but internal mistakes. Small business owners frequently ask me, “How do breaches happen?” Common examples include:

• Storing sensitive files on personal laptops without encryption
• Using unsecured communication channels (text, email) to send sensitive documents
• Accessing employee data from a personal phone or home computer
• Forgetting to delete photos of sensitive documents taken on a mobile device
• Discussing private employee information in informal conversations

According to the same survey, 53% of HR professionals have accessed employee data using a personal device, and 45% admit they or a colleague shared sensitive information with someone outside the company. These everyday habits create serious liability.

What Data Privacy Laws Apply to Employers in New York and New Jersey?

New York and New Jersey have state and federal laws that impose specific duties around employee data handling and breach notification. During consultations, employers often ask, “What legal obligations do we have toward employee data?”

New York: The SHIELD Act requires businesses to install “reasonable” technical and procedural safeguards in place to protect personal information. It also mandates prompt notification of any data breach involving private information.

New Jersey: The Identity Theft Prevention Act similarly requires that employers notify individuals affected by a breach without unreasonable delay. Negligence in protecting personal data may also expose employers to lawsuits.

Federal laws such as HIPAA (for health-related information) and the Fair Credit Reporting Act (for background checks) may apply depending on the context. Failure to follow any of these laws can result in civil penalties, investigations, and costly litigation.

What Steps Can Employers Take to Ensure Employee Data Protection?

Legal compliance starts with updated policies, but implementation is what protects your business. Here are some specific, employer-tested strategies to improve employee data protection. During workshops, employers regularly ask, “What are some ways we can protect employee data right now?”

• Align HR, Legal, and IT Teams: Work collaboratively across departments to create and maintain clear protocols for data handling and access.
• Use Secure Onboarding and Storage Platforms: Invest in HR software that includes encryption, access controls, and audit trails.
• Limit Personal Device Use: Restrict sensitive data access to managed, company-issued devices whenever possible.
• Train Staff Regularly: Incorporate quarterly refreshers on phishing, device security, and proper data sharing.
• Audit Your Policies and Practices Annually: Review internal protocols each year to confirm legal compliance and close emerging security gaps.

These measures help meet legal standards and strengthen employee trust in your organization.

What is the Proper Response for Employers Following an Employee Data Breach?

The best response to a data breach involves transparency, speed, and support. In the unfortunate event of a breach, employers frequently ask me, “What are the essential steps we must take in the first 48 hours?”

• Notify affected employees as soon as possible following discovery.
• Offer credit monitoring or identity theft protection services immediately.
• Communicate clearly what happened, what has changed, and what’s being done to prevent future breaches.
• Document all response efforts thoroughly for legal and compliance review.

An informed, empathetic approach can go a long way toward rebuilding trust and limiting legal exposure.

Employee Data Privacy FAQs

What is the Leading Cause of Data Breaches Affecting Employees?

Human error is the leading cause of workplace data breaches. Many incidents occur when employees or HR professionals use personal devices or unsecured applications during onboarding or routine communications. These small oversights can have significant consequences.

Is it Permissible for Employers to Store Employee Data on Personal Devices?

It’s not always prohibited, but storing employee data on personal devices creates unnecessary risk. It may violate internal security policies or data protection laws and opens the door to unauthorized access, especially if those devices get lost or hacked.

Do Small Businesses in New Jersey Need a Formal Data Privacy Policy for Employees?

Yes, businesses of all sizes in New Jersey handling employee personal information should maintain a formal data privacy policy. The Identity Theft Prevention Act applies regardless of company size, and small businesses may face proportionally larger impacts from fines and reputational damage after a breach.

What is the Best Way for Employers to Collect Personal Data During Onboarding?

The best approach to collecting personal data during onboarding is to use secure, encrypted systems designed for document transfer. These platforms keep employee information centralized and protected, minimizing the chances of exposure through email or text. Employers should also clearly communicate how the information will be used and safeguarded.

How Frequently Should Employers Conduct Data Security Training for Staff?

Training employees on data security should happen regularly, not just during onboarding. Periodic refresher courses can help prevent lapses in judgment and keep staff informed of new threats and technologies. When employees understand the why behind data protocols, they’re more likely to follow them.

About the Author

Ty Hyderally is the owner of Hyderally & Associates, P.C., a prominent employment law firm with offices in Montclair, New Jersey and New York, New York. A seasoned litigator and former President of the National Employment Lawyers Association (NJ), Mr. Hyderally has been recognized among the Top Ten Leaders in Employment Law in Northern New Jersey.

What Should Employers in NY and NJ Do Next About Data Privacy?

If your business hasn’t reviewed its data handling policies in the last year, it’s time to act. Start by evaluating your systems, revisiting your training, and involving legal and IT professionals to assess risk.

As an employment lawyer representing businesses across New York and New Jersey, I’ve helped clients resolve employee data incidents, install compliance frameworks, and train their teams. Addressing privacy now can help you avoid regulatory penalties, reduce liability, and strengthen workplace confidence.

To discuss how your company can better protect employee data, contact Ty Hyderally for tailored legal guidance.

Resources:

https://www.bamboohr.com/resources/data-at-work/data-stories/2023-data-privacy

https://www.nortonrosefulbright.com/en-us/knowledge/publications/cc043475/2025-annual-litigation-trends-survey