On March 24, 2016, Tennessee's Governor Bill Haslam signed SB2005/HB1631, amending Tennessee's data breach notification statute, Tenn. Code § 47-18-2107. The amendment, which will take effect July 1, 2016, makes significant changes to the current requirements for data breaches affecting Tennessee residents.

First, the amendment changes how quickly businesses must notify Tennessee residents affected by a data breach. Previously, the statute required individual notification in the most expedient time possible and without reasonable delay. The updated law will now require businesses to notify affected individuals immediately, and in any case within 45 days, after discovery of the breach (unless a delay is required by law enforcement investigating the breach).1 Most states still only require a "without reasonable delay" standard. Tennessee joins a small but growing number of states that require notification within a certain time period (e.g., Florida, Ohio).

The amendment also removes the statute's previous provision allowing for companies to time notification in light of the company's efforts to determine the scope of the breach and restore "the reasonable integrity of the data system." As amended, there is no longer an allowance to consider such investigative and system restoration measures taken by a company when determining whether the timing of notices complies with the statute.

SB2005/HB1631 also amends Tennessee's statute to expand the categories of data breaches that are subject to notification requirements under Tennessee law. Companies will now need to notify individuals of instances of unauthorized access to or acquisition of their personal information, even if it is encrypted. This is a significant difference from most other states, which only require notification in the event of disclosures of unencrypted information.

The amendment will also modify the definition of "unauthorized person," triggering a breach notification to include employees who have obtained personal information and intentionally used such information for an unlawful purpose. This change will expressly address instances where a company's employee has improperly accessed personal information held by the company, requiring a company to notify Tennessee residents affected by such use if otherwise required under the statute.

Finally, while there is currently an exemption for entities subject to Title V of the Gramm-Leach-Bliley Act of 1999 (GLBA), the amendment creates an additional exemption for entities that are subject to the Health Insurance Portability and Accountability Act of 1996 (HIPAA).