COVID-19: How to Keep Cybersecurity in Mind When Negotiating Work-From-Home Vendor Contracts

Under the CCPA, a "sale" of information comes with stringent opt-out and notice obligations, even if no money is exchanged. Transfers to "service providers," however, are exempted. For a vendor to qualify as a "service provider," the transfer of personal information to them must be necessary for a "business purpose," as defined by California law, and the contract must contain certain provisions, such as a restriction on the vendor's ability to sell, retain, use, or disclose the personal information, and a certification that the vendor knows, understands, and will comply with the CCPA.

Under the GDPR, a business is required to enter into more robust contracts known as data processing agreements. The terms that must be included in these contracts depend on whether the vendor qualifies as a "processor," "joint controller," or an independent controller with shared access to the data. It is common for a vendor to purport to be a processor, but act like a controller. Understanding the vendor's data handling practices will help the business identify any inconsistencies and negotiate the appropriate contract.

Review Your Privacy Policy

Regulators and litigants are increasingly suing businesses that don't accurately disclose their data handling practices, so it is important that businesses update their privacy policies to accurately reflect the personal information collected, used, and shared with any new vendors. In addition, some vendors require that particular terms be included in their contractual partners' privacy policies. If your vendor is one of them, make sure you know it and comply.

Consider the Contract's Cybersecurity Standards and Breach Notification Obligations

Businesses should evaluate the vendor's cybersecurity practices and think about what will occur in the event of a data breach. This may require an examination of the parties' contractual cybersecurity obligations, including the cybersecurity standards that the parties follow as a matter of course, any industry standards or best practices, and proof in the form of an audit. The contract should also address the parties' obligations in the event of a cybersecurity incident or breach. Compare the definition of a "cybersecurity incident" in the contract to your information security team's understanding of the term. It should be sufficiently broad to include incidents that may not rise to the level of a data breach under state notification laws.

Understand the Vendor's Service Obligations and Plan for Interruptions

Many contracts promise uptime levels or percentages of uninterrupted service. As entire workforces work from home, there is unusual stress on technology, making system interruptions more likely. Knowing what the vendor contract promises in advance can help the business plan for interruptions and add certainty in uncertain times.

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Steve Blickensderfer and Trish Carreiro are cybersecurity and privacy attorneys at Carlton Fields in Miami. This article also appeared in Daily Business Review, the Miami-based ALM sibling of Cybersecurity Law & Strategy.