THE SOCIAL SECURITY NUMBER PRIVACY ACT
The State of Michigan has enacted a law that requires all persons and businesses that obtain one or more social security numbers of other persons, such as those of customers or employees, during the ordinary course of business to create a written privacy policy describing how to secure those social security numbers. Persons who knowingly violate the Act will be subject to $1000 fine and/or 93 days in jail. The Act also allows civil suits to be filed and knowing violators are liable to pay the greater of any Actual Damages as a result of the violation or $1000, in addition to reasonable attorney fees. Since many businesses in Michigan obtain social security numbers of others during the ordinary course of business, it will be important for these businesses to comply with Michigan’s Social Security Number Privacy Act.
In order to comply with the Social Security Number Privacy Act, a business must have in place, by January 1, 2006, a privacy policy for protecting social security numbers. The privacy policy must ensure the confidentiality of social security numbers; prohibit the unlawful disclosure of social security numbers; limit who has access to information and documents containing social security numbers; describe methods for properly disposing of documents containing social security numbers; and establish penalties for violations of the privacy policy. The privacy policy must be in writing and be contained within an employee handbook, a procedures manual or other similar document. The written policy requirement can be satisfied by having the privacy policy made available electronically.
With the growing number of identity theft crimes in America, the State of Michigan is taking an active role in protecting consumers. The Social Security Number Privacy Act is a step in protecting people from identity theft. Employers, on the other hand, who have the misfortune of employing employees that steal the company’s customers/clients social security numbers are exposed to potential liability for the employee’s crimes. Compliance with the Social Security Number Privacy Act will be a necessary step businesses must take to protect themselves from such liability.
This issue will be especially important to union contractors and contractors who are required to keep prevailing wage reports, both of whom use social security numbers with regularity. Our firm has been following the developments in the Social Security Number Privacy Act and we are ready to help businesses draft privacy policies that will meet the requirements of the Act and help protect employers from potential liability.
