California Governor Jerry Brown signed Senate Bill 46 (S.B. 46) (PDF) into law on Friday, September 27, 2013.  The new law expands the current breach notification requirement to include a known breach of a security system, not just a confirmed loss of Social Security, driver's license numbers, credit card numbers, or medical and health insurance information.

Starting on January 1, 2014, governmental agencies and any person or business that conducts business in California and that owns or licenses computerized data that includes personal information will be required to notify consumers of any breach of the security of the system following discovery or notification of the breach in the security of the data to any resident of California whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. Much of the text of the new law has been reformatted and provided below to give the reader an easily digestible version of the most relevant portions of the new law.

"Personal Information" means either (1) an individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted:

  • Social security number.
  • Driver's license number or California identification card number.
  • Account number, credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual's financial account.
  • Medical information. "Medical Information" means any information regarding an individual's medical history, mental or physical condition, or medical treatment or diagnosis by a health care professional
  • Health insurance information.  "Health Insurance Information" means an individual's health insurance policy number or subscriber identification number, any unique identifier used by a health insurer to identify the
    individual, or any information in an individual's application and claims history, including any appeals records.; or

(2) a user name or email address, in combination with a password or security question and answer that would permit access to an online account.

"Personal Information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records.

The highlights of the law include:

  • The disclosure shall be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement or as necessary to determine the scope of the breach and restore the reasonable integrity of the data system.
  • The notification may be delayed if a law enforcement agency determines that the notification will impede a criminal investigation.  The notification shall be made after the law enforcement agency determines that it will not compromise the investigation.
  • The security breach notification shall be written in plain language.
  • The security breach notification shall include, at a minimum, the following information: (a) the name and contact information of the reporting person or business; (b) a list of the types of personal information that were or are reasonably believed to have been the subject of a breach; (c) if the foregoing information is possible to determine at the time the notice is provided, then any of the following: (i) the date of the breach, (ii) the estimated date of the breach, or (iii) the date range within which the breach occurred (the notification shall also include the date of the notice); (d) whether notification was delayed as a result of a law enforcement investigation, if that information is possible to determine at the time the notice is provided; (e) a general description of the breach incident, if that information is possible to determine at the time the notice is provided; and (f) the toll-free telephone numbers and addresses of the major credit reporting agencies if the breach exposed a social security number or a driver's license or California identification card number.
  • At the discretion of the person or business, the security breach notification may also include any of the following: (a) information about what the person or business has done to protect individuals whose information has been breached, and (b) advice on steps that the person whose information has been breached may take to protect himself or herself.

With respect to the manner of notification, "notice" may be provided by one of the following methods:

  • Written notice.
  • Electronic notice, if the notice provided is consistent with the provisions regarding electronic records and signatures set forth in Section 7001 of Title 15 of the United States Code.
  • Substitute notice, if the person or business demonstrates that the cost of providing notice would exceed two hundred fifty thousand dollars ($250,000), or that the affected class of subject persons to be notified exceeds 500,000, or the person or business does not have sufficient contact information. Substitute notice shall consist of all of the following: (a) email notice when the person or business has an email address for
    the subject persons; (b) conspicuous posting of the notice on the Internet Web site page of the person or business, if the person or business maintains one; and (c) notification to major statewide media.

Additionally, if the breach includes a user name or email address, in combination with a password or security question and answer that would permit access to an online account, but not including any of the other information in the above definition of Personal Information, the person or business may provide the security breach notification in electronic or other form that directs the person whose personal information has been breached promptly to change his or her password and security question or answer, as applicable, or to take other steps appropriate to protect the online account with the person or business and all other online accounts for which the person whose personal information has been breached uses the same user name or email address and password or security question or answer.

If the breach includes a user name or email address, in combination with a password or security question and answer that would permit access to an email account furnished by the person or business, the person or
business shall not comply with this section by providing the security breach notification to that email address, but may, instead provide notice by another method described above or by clear and conspicuous notice delivered to the resident online when the resident is connected to the online account from an Internet Protocol address or online location from which the person or business knows the resident customarily accesses the account.

Notwithstanding the above, a person or business that maintains its own notification procedures as part of an information security policy for the treatment of personal information and is otherwise consistent with the
timing requirements of the law, shall be deemed to be in compliance with the notification requirements if the person or business notifies subject persons in accordance with its policies in the event of a breach of security of the system.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.