HR data security is one of the top tasks human resources teams are responsible for to ensure the safety and protection of their organizations. In the vast digital world we find ourselves in, employee data, from Social Security numbers and bank information to addresses and personal information, it can be easy for data breaches to compromise this sensitive information. A current issue pertaining to HR’s use of data is not having the right safeguards in place to prevent breaches from compromising information. In this guide, we’ll dive into the importance of HR data security, tips for implementing an HR data security policy, and more so you can rest assured knowing all confidential information is protected.
Why HR Data Security Is More Critical Than Ever
With remote and hybrid work on the rise, more and more information is being stored digitally. While this allows organizations to hire from a vast pool of qualified candidates from around the world, it increases the risk of sensitive information falling into the wrong hands. Now more than ever, HR data security is vital to protecting your organization and employees.
- Identity theft and fraud prevention: One of the top reasons HR data security is essential is preventing fraud and identity theft by ensuring personal identification details aren’t stolen. Employee records often contain confidential information, such as Social Security numbers, addresses, and banking details, making them a top target for cybercriminals. Even if an employer is adequately protecting employee data, it’s important to recognize the signs of identity theft and fraud that can still cost money. Unemployment claims fraud can raise unemployment taxes for employers unless they have a process to validate claims and identity fraudulent attempts to collect benefits. This can occur when a bad actor uses another person’s personal information to illegally receive unemployment benefits. An unvalidated verifier with no true permissible purpose could receive information for your employees through common, unregulated income and employment verification channels.
- Compliance: Any HR employee will understand the importance of maintaining compliance with local, state, and federal regulations. When it comes to data privacy, common data protection laws like GDPR, CCPA, and HIPAA have strict requirements for protecting data. Failure to comply can result in costly penalties and fees, along with fringe consequences like a damaged reputation and poor employee satisfaction.
- Protection from insider threats: Not every cybercriminal is an external party. In some cases, internal players, such as disgruntled employees or those with unauthorized access, can misuse confidential information. Mistakes can happen, employee data could be left in common areas like copiers or fax machines as it’s circulated internally to respond to verification requests.
- Maintaining employee satisfaction: To ensure a positive employee experience, instilling a sense of trust is crucial. Having a robust HR data security policy can offer employees peace of mind that their personal details are safe and not at risk of theft or misuse.
- Seamless business continuity: A data breach can impact nearly every aspect of your business, from disrupting payroll processing to stalling benefits administration and hiring. To avoid operational inefficiencies, it’s crucial for HR teams to prioritize data privacy.
- Prevent legal and financial liabilities: Leaked employee data can result in lawsuits, financial losses, and regulatory penalties, which can impact your bottom line and reputation. Having data security measures in place can prevent these costly occurrences from impacting your cash flow.
Common HR Data Security Threats to Watch For
Unfortunately, there are countless HR data security threats on the rise. However, knowing what to watch out for can help you stay one step ahead of fraudsters and cybercriminals. Take a look at some of the top data security threats HR departments should watch for:
- Data breaches and cyberattacks: With online HR platforms housing mounds of sensitive personal data, they make a top target for cybercriminals. Hackers actively try to target HR software to sell personal information on the dark web or use it for identity theft and fraud.
- Unauthorized access: It’s essential for HR administrators to ensure the software they use has role-based permissions to ensure employees who don’t need access to sensitive information can’t view, edit, or download it and increase the risk of data leaks.
- Insider threats: In some cases, disgruntled employees may try to access sensitive personal information of other employees to use that data for personal gain or sabotage.
- Phishing and social engineering attacks: One of the latest threats to HR data security is phishing and social engineering schemes, where cybercriminals use fake emails or HR portals to trick employees into revealing login credentials, which can then allow these cybercriminals to gain access to HR systems. For example, responding to income & employment verification requests on behalf of your employees is essential to avoid delaying their potential loan for a new car, home and more. However, it’s essential to ensure only verified requesters receive authorized employee data.
- Insecure cloud storage: Many HR teams now leverage the benefits of the cloud, which makes it easy to access and store important files. However, failing to take the right security measures, such as encryption and multi-factor authentication, can expose sensitive data.
- Remote work risks: While remote work has been shown to improve employee satisfaction and allow employers to hire staff from nearly anywhere in the world, it does pose potential security risks. Remote workers accessing systems from unsecured devices or using public WiFi without a VPN can make it easy for cybercriminals to hack their devices and gain unauthorized access.
- Ransomware attacks: Malware that encrypts private HR data and demands payment for its release can severely cripple HR processes, such as payroll, benefits administration, and onboarding.
Best Practices for Strengthening HR Data Security
Strengthening HR data security requires a combination of strong cybersecurity measures, strict access controls, employee training, and compliance with data regulations. To start, having a strong HR data security policy in place is crucial. An HR data security policy outlines how your organization will protect employee and company data to mitigate risks. This policy should define who has access to HR data, the requirements for encryption and multi-factor authentication, employee responsibilities for securing passwords and avoiding phishing scams, and more. With an HR data policy in place, HR departments can then relay this information to employees throughout the organization and ensure best practices are followed, such as:
- Implement strong access controls: HR teams should use role-based access controls to ensure access to data is granted to only those who need it. Additionally, multi-factor authentication should be set up to access HR systems, emails, and other platforms that may contain sensitive information.
- Encrypt sensitive data: A current issue pertaining to HR’s use of data is a lack of encryption. HR teams should encrypt all employee data at rest and in transit to prevent unauthorized access.
- Regularly update HR systems: Scams and cyberattacks are continually evolving, emphasizing the importance of regularly updating HR systems to stay up to date and fix security vulnerabilities.
- Train employees: HR teams aren’t the only members of an organization who should be well-versed in HR data privacy best practices. It’s crucial to regularly train all staff within your company on phishing scams, W-2 scams, social engineering, and password security to prevent human errors that could lead to breaches.
- Secure remote workers: For teams with remote staff, require the use of VPNs and secure WiFi connections and enforce screen-locked policies on company devices.
- Conduct security audits: Throughout the year, HR teams should conduct internal security audits to identify weaknesses and ensure compliance with data protection laws like GDPR, CCPA, and HIPAA.
Strong data security is also an essential responsibility for third parties an employer may utilize for services such as income & employment verification fulfillment, Form I-9 management, tax withholding, Year-End reporting and more. For example, Experian’s data facilities rank in the most secure tier for reliability and uninterruptible availability according to the Uptime Institute. Employers should always consider data management outside of their own internal processes if relying on vendors to improve employer processes for them. From securely sharing information for employment verification to conducting regular audits and training employees, there are several HR data security best practices to follow to ensure the protection of sensitive employee data.
How Technology Can Strengthen HR Data Security
Technology plays a crucial role in strengthening HR data security. With advanced tools designed to protect employee information, there are several reasons why organizations should turn to technology to improve their security. Cloud-based HR software is an excellent place to start, offering HR teams an accessible HR solution that contains robust security measures like encryption, access logs, and automated backups. AI-powered security tools are another great resource that can be used to detect suspicious login attempts, data breaches, and unusual activity within HR systems in real time.
Another crucial piece of tech for HR teams is a modern HR portal employees can use to access information like their payroll, benefits, and personal records with encryption and authentication features. Not only does this ensure a secure way to access information, but it also reduces the need for HR-based email interactions, which can lead to phishing attempts.
Other ways technology can help strengthen HR data security is by offering remote work protection with tools like VPNs and mobile device management tools, along with biometric authentication like fingerprints and facial recognition for an added layer of security.
Compliance and Legal Considerations for HR Data Privacy
HR teams must ensure their data protection measures comply with data privacy regulations. As mentioned, one of the top regulations in the EU and the UK is the GDPR—General Data Protection Regulation—which requires organizations to protect employee information and gain explicit consent for data processing. Another key data privacy regulation is the California Consumer Privacy Act, which is applicable in the state of California. The CCPA gives employees the right to know, delete, and opt out of data collection, and employers must inform how they collect and use employee data.
In the United States, HIPAA, the Health Insurance Portability and Accountability Act, applies to employers handling health-related employee data, such as medical records, requiring strict encryption and access controls to protect health-related HR data. The Fair Credit Reporting Act (FCRA) governs background checks and credit reports during the hiring process, requiring written employee consent when conducting a background check, while the U.S. Equal Employment Opportunity Commission (EEOC) regulations handle data around discrimination complaints, diversity data, and hiring records.
As an HR department, understanding these legal considerations and data privacy laws is essential to avoiding non-compliance penalties and fees.
Future Trends in HR Data Privacy & Security
HR data security is evolving rapidly due to advancements in technology. Future trends to look out for include the use of AI and machine learning, where AI-powered solutions have the ability to detect fraud and breaches in real time. Blockchain technology is also advancing HR data security measures, providing tamper-proof records for payroll, benefits, and more. Additionally, biometric data like fingerprints and voice and facial recognition are adding additional layers of security, while cloud-based HR security systems now include features like end-to-end encryption and automated backups.
Building a Culture of HR Data Security
As an HR team, building a culture of HR data security throughout all levels of your organization can ensure protection for every employee. Through regular training, you can keep employees up to date on the latest phishing scams and social engineering methods to ensure they know how to detect fraudulent activity. Paired with HR technology, you can foster a culture of trust that keeps data secure and operations running smoothly.
Explore Where Experian Employer Services Can Help Make Your HR More Secure and Efficient
We now know the importance of HR data security for businesses. At Experian Employer Services, our workforce management solutions are designed to help, featuring state-of-the-art security measures to keep sensitive information safe. Book a demo today to learn more.