The California Consumer Privacy Act of 2018 takes effect on January 1, 2020. It has several disclosure, notice, and management requirements. We will explore those specific requirements in later posts, but today we will be focusing on the applicability of the CCPA.
Many smaller business may think that the CCPA might not apply to their activities. But there are some nuances that businesses should be aware of.
The law applies to "businesses," which is defined broadly to include almost any arrangement that is run for profit, from corporations to sole proprietorships. It is also a requirement that the entity "does business in California." And the business must meet at least one of the following additional requirements:
1. Revenue in excess of $25 million;
2. Alone or in combination buys, sells, receives, or shares for commercial purposes the personal information of 50,000 or more consumers, households, or devices on an annual basis;
3. Gets 50 % or more of its revenue from selling consumers’ personal information; or
4. Any entity that controls or is controlled by a “business” that shares common branding with the business.
The last two requirements may catch many smaller businesses unaware. Even if your business is not that big, if a significant portion of your revenue is derived from personal information, then you need to make sure that the CCPA does not apply. Additionally, many smaller companies may partner with larger companies or be acquired by a larger company that triggers the fourth requirement.
Many times more entrepreneurial companies get investment or are purchased by larger companies, but the leadership continues on and still think of themselves as the small company they started as. It is important to be mindful of how investment, acquisition, or joint-venture projects may impact the applicability of the CCPA to your small business. An experienced lawyer can help you navigate these complex issues.
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