What do you do if your HR benefits and payroll vendor suffers a cyber-attack and payroll can’t be run? Do you have a backup plan for running payroll? How will you communicate with your employees? And if your benefits and payroll vendor has a cyber-incident and your employees’ highly sensitive data is exfiltrated, what will be your response and your liability?

Here is a perfect tabletop exercise that is real.

This week, it is being reported that PrismHR (which provides online payroll, benefits and human resources services to professional employer organizations offering those services to small businesses) suffered a cyber-attack over the weekend that caused outages to its systems. Although there is speculation that PrismHR was the victim of a ransomware attack, it has not confirmed that is the case, only that it suffered a cyber incident.

PrismHR stated that it is looking into the incident and that payroll will not be affected this week, and that it is waiving administrative fees for the current payroll period. Obviously, depending on the results of the investigation and whether any employee data were accessed or exfiltrated, PrismHR might have reporting obligations, including to its customers and their employees.

Whatever the outcome, the scenario is a perfect tabletop exercise to plan for and determine the risk and consequences for your organization. HR, payroll, and benefits vendors collect, maintain, use, and disclose highly sensitive data of employees, so managing the risk through security due diligence and strong contractual provisions is crucial for your risk management plan.

Photo of Linn Foster Freedman Linn Foster Freedman

Linn Freedman practices in data privacy and security law, cybersecurity, and complex litigation. She is a member of the Business Litigation Group and the Financial Services Cyber-Compliance Team, and chair’s the firm’s Data Privacy and Security Team. Linn focuses her practice on…

Linn Freedman practices in data privacy and security law, cybersecurity, and complex litigation. She is a member of the Business Litigation Group and the Financial Services Cyber-Compliance Team, and chair’s the firm’s Data Privacy and Security Team. Linn focuses her practice on compliance with all state and federal privacy and security laws and regulations. She counsels a range of public and private clients from industries such as construction, education, health care, insurance, manufacturing, real estate, utilities and critical infrastructure, marine and charitable organizations, on state and federal data privacy and security investigations, as well as emergency data breach response and mitigation. Linn is an Adjunct Professor of the Practice of Cybersecurity at Brown University and an Adjunct Professor of Law at Roger Williams University School of Law.  Prior to joining the firm, Linn served as assistant attorney general and deputy chief of the Civil Division of the Attorney General’s Office for the State of Rhode Island. She earned her J.D. from Loyola University School of Law and her B.A., with honors, in American Studies from Newcomb College of Tulane University. She is admitted to practice law in Massachusetts and Rhode Island. Read her full rc.com bio here.