What Employers Need to Know About New York’s Beefed-Up Social Security Number Protection Law

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New York Governor Andrew Cuomo recently signed an amendment to the state’s Social Security Number Protection Law. The amendment — which is designed to strengthen consumer privacy and protect against identify theft — became effective on December 12, 2012.

Before the amendment was passed, the law (New York General Business Law Section 399-dd) prohibited persons and entities, including employers, from intentionally making available to the public an individual's Social Security number. It prohibited employers from printing an individual's Social Security number on a card or tag, requiring an individual to provide his or her Social Security number over the Internet (except through a secure connection) and printing an individual’s Social Security number on the outside of materials being mailed.

The new amendment takes these protections one step further, imposing additional limitations on the ability of business entities to collect an individual's Social Security number in the first place.

Specifically, unless an express exception is satisfied, the amendment prohibits a person, firm, partnership or other business entity from requiring an individual to disclose or furnish his or her Social Security number for any purpose, and from refusing any service, privilege or right to an individual because the individual refuses to disclose his or her number.

Exceptions

The amendment includes an exception for circumstances where a Social Security number is requested for purposes of employment. This exception allows employers to request an individual's Social Security number in the course of the administration of a claim, benefit or procedure related to the individual’s employment, including the individual’s termination from employment; in the course of procedures related to retirement from employment or injury suffered during the course of employment; or to check on an unemployment insurance claim.

The amendment also allows employers to request a Social Security number to conduct a criminal or other background check permitted by New York State law, where the individual consents to its use, where it is being requested for the purposes of collecting child support and for other reasons outlined in the amendment.1 All other requests not delineated by the exceptions are prohibited.

Implications for Employers

Failure to comply with the law are enforced by the state’s Attorney General and can result in a fine of up to $500 for the first violation and up to $1,000 dollars for any further violation. No violation will be found if it is determined that the action was unintentional and resulted from a bona fide error. To the extent that an employer’s practices result in widespread violations, the potential liability could be significant.

Given this new amendment, employers should take precautions to ensure that they request Social Security numbers only for employment-related purposes that are consistent with the law.


Notes

1 For a full list of exceptions, see N.Y. Gen. Bus. Law, §399-ddd, available here.