The Privacy Shield: What U.S. Multinational Employers Need To Know To Enjoy The Benefits Of The Newest EU-U.S. Data Transfer Mechanism

Since the European Court of Justice declared invalid, on October 6, 2015,1 the Safe Harbor agreement between the U.S. Department of Commerce and the European Commission for the transfer of personal data, hundreds of U.S. multinationals have been struggling to find an alternative while waiting hopefully for the Safe Harbor’s replacement. The Privacy Shield, effective as of July 12, 2016, may provide the alternative these organizations have been seeking. For U.S. multinationals that relied on the Safe Harbor to transfer human resources data from EU subsidiaries to their U.S. parent corporation, the Privacy Shield will seem familiar notwithstanding U.S. and EU officials’ public pronouncements that this new data transfer mechanism substantially enhances the now much-maligned Safe Harbor. Nonetheless, U.S. multinationals should consider several caveats before strapping on the Privacy Shield.