Employee Social Security NumbersFor anyone who has played sports, you’ve probably heard a coach say something like, “play through the whistle.” The idea being you don’t let up until the play is over. The same applies to running a company. Except when it comes to making the difficult decision to close a business, not playing through the whistle can result in more than just getting benched; You could be looking at civil and criminal penalties if employee records involving social security numbers and related information are not properly disposed of.  

This is the likely scenario playing out in Commerce Township. Specifically, Jessica Dupnack of Fox 2 reported that “piles of personal employee files” were found in a dumpster behind a Commerce Township business. The business, a ship and print center, recently closed after being evicted for non-payment. These files included Social Security numbers, bank routing numbers, licenses, and other personally identifiable information.

While it appears the business owner neglected to comply with the legal requirements for properly disposing of this information, thankfully, Fox 2 stepped up and did the right thing by informing the Oakland County Sheriff’s Department.   

Violations for Mishandling Employee Social Security and Privacy

Under Michigan’s Social Security Number Privacy Act, MCL 445.81 et seq., employers must comply with several restrictions or prohibitions regarding using an employee’s Social Security number. 

And an employer who obtains Social Security numbers in the ordinary course of business must create a privacy policy that does at least all of the following concerning the Social Security numbers the person possesses or obtains:

  1. ensures to the extent practicable the confidentiality of the social security numbers;
  2. prohibits unlawful disclosure of the social security numbers;
  3. limits who has access to information or documents that contain the social security numbers;
  4. describes how to dispose of documents that contain the social security numbers properly; and
  5. establishes penalties for violation of the privacy policy.

MCL 445.84. 

There are criminal penalties for knowing violations of the prohibitions discussed above. There are also provisions for civil actions for actual damages and the recovery for attorneys’ fees. MCL 445.86.

As a business owner and attorney who represents many business clients, we know owning a business has never been easy. And it doesn’t get any easier when the company closes down. But taking shortcuts when it comes to disposing of employee personnel records may open the door to criminal and civil liability. And it is simply not fair to expose your employees’ personally identifiable information. 

Use this link to contact Michigan attorney Jason Shinn if you have questions about this article or complying with Michigan or federal employment lawsSince 2001, Mr. Shinn has represented companies and individuals concerning the issues discussed above and other employment matters under federal and Michigan employment laws.