Every business owner and entrepreneur gather a large amount of personal and sensitive information about their employees. Employee data is collected for many different reasons such as evaluations, application processes, organizational and legislative purposes. Employee data typically consists of the full name(s), dates of birth, residential addresses, photos, social security numbers, ID or passport copies, medical or physical records, and all the sensitive information from meetings (i.e. discussions about employees, potential cases of misconduct, etc), evaluations and personal conversations.

Furthermore, as our technology evolves so are the information management systems that many businesses use. The increasing user-friendly software applications also present the opportunity to outsource several tasks which is an upcoming trend, yet this increases the complexity and potential risks as employee data is flowing through multiple channels.

In this article, we don’t dive into the soup mix of all the specific laws and regulations on this topic, considering the laws and regulations are very different from country to country, and within the U.S. even from state to state. Interestingly, the laws on personal information in Europe are way more extensive and stricter in comparison to the U.S.

It’s of utmost importance for employers to maintain the privacy of their employees and protect sensitive personal information.


There’s a number of different reasons, however, the possible result of losing important employee information may cost a business heavily by losing clients, investors, or customers. This could eventually lead to losing the business as a whole.

Hackers could use personal data such as social security numbers or bank account details to execute illegal transactions, identity theft, fraud, and extortion. For the employer, this could turn into a very costly lawsuit coming their way. Aside from the fact that one or multiple employees fall victim to data loss, the remaining workforce is highly likely to lose trust and motivation to work for someone who is careless with their personal information. Which could then lead to losing a chunk of your workforce, lower productivity, or lower job satisfaction. All these factors indirectly result in loss of revenue and profit.

The legal team of a business carries out the required necessities in order to create a digital environment in which employee data protection is as secure as possible. With that comes a lot of responsibility, however, at the end of the day the one who is responsible in most situations is the employer. The security team is not liable for the type of data that is collected nor decide who has access to the data. Therefore, the protection of sensitive data must be regarded as highly important which means that appropriate security measures have to be implemented to maintain the security of this data and treat it as such.

What can you do as an employer?

1) Restricted Access

Every employer should think carefully about who has access to sensitive employee data and restrict the number of people with full access as much as possible. Generally speaking, the fewer people have access, the less likely the chance for a human mistake to cause leakage of personal data. Employers should consider that not all employees in for example HR, need all the available employee data in order to perform their tasks.

2) Data encryption

It’s important to create proper protocols when it comes to sharing employee data and the security team has to set up a safe environment where all the data is encrypted while the encryption key is safely stored and only accessible by a very select group of people.

In case you’re running a business that’s operating in the cloud without an in-house server, make sure to hire a cloud specialist in order to develop a safe and secure online platform to store employee data.

3) Security Protocols & Contingency Plan

Apart from working closely together with your security team to prevent any leakage of data and setting up security protocols, every employer should also think about a contingency plan for when things go sideways.

Prevention policies are important but it’s impossible to prevent every attack or human error from happening which could cause data leaks.

Every company should have a protocol in place for when the system is breached, immediate response steps for the security team, the legal team knows what to do, and different scenarios are already rehearsed. You want to minimize the risk of being surprised and face a situation in which no one knows what to do.

Imagine your database is being hacked and no one knows what to do, that’s the perfect recipe for a huge disaster.

4) Communication

Communication is key for many businesses in many different ways. As it is when it comes down to data protection and security policies. Every employer should raise awareness and communicate to all of its employees about the importance of data security and the potential risks. Employees also carry responsibility when dealing with important information and everyone should work together as a team to maintain a safe environment for employee data.

But remember: in most situations, the employer carries the final responsibility.

Bill Hess here from My blog is all about making the world of online security accessible to everyone. I pride myself in writing guides that I’m certain even my own mom could read! Be sure to head over to my blog if you’re interested in keeping your private information just that: Private!