On August 30, 2020, the California legislature passed Assembly Bill 1281, which extends the CCPA's business-to-business and employee exemptions by one year until January 1, 2022. The bill now moves to the California Governor's office.
The Assembly Floor Analysis explained that the initial one-year sunset provision for these exemptions was "intended to provide a one-year delay to give stakeholders time to negotiate an appropriate solution with respect to employee privacy rights and business-to-business communications. Since then, the uncertainty surrounding the COVID-19 pandemic has resulted in the Legislature shifting its focus to how to best serve the immediate needs of the State, while at a time navigating an increasingly complicated legislative process. As a result of the complications experienced because of the pandemic, more time is needed to work on developing a comprehensive framework in law that deals with business-to-business communications and transactions and the collection of certain personal information by employers."
Notably, the bill will become inoperative if California voters approve the California Privacy Rights Act ballot measure on November 3, 2020. The CPRA ballot measure, if passed, would extend the exemptions for two years to allow lawmakers more time to negotiate a long-term solution. Given that the latest polling on the CPRA shows it is on track to pass with overwhelming support, the impact of AB1281 may be short lived. Nonetheless, businesses that have been relying on the exemptions can take solace in knowing that the exemptions (pending the Governor's approval) will remain in place for at least another year.
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