The Montana Consumer Data Privacy Act (MCPDA) incorporates exemptions for specific purposes of processing as a factor in determining the law's applicability. This factor significantly limits the scope of the law's application based on certain processing purposes and types of entities.

Text of Relevant Provisions

MCPDA Section 3 states:

"(1) control or process the personal data of not less than 50,000 consumers, excluding personal data controlled or processed solely for the purpose of completing a payment transaction;"

MCPDA Section 4(2)(o) states:

"data processed or maintained: (i) by an individual applying to, employed by, or acting as an agent or independent contractor of a controller, processor, or third party to the extent that the data is collected and used within the context of that role; (ii) as the emergency contact information of an individual under [sections 1 through 12] and used for emergency contact purposes;"

Analysis of Provisions

The MCPDA includes specific exemptions that limit its scope of application:

1. Payment Transactions: The law explicitly excludes "personal data controlled or processed solely for the purpose of completing a payment transaction" from the consumer count threshold. This means that if a company processes data for 50,000 consumers, but some of this data is used solely for payment transactions, those consumers are not counted towards the 50,000 threshold.
2. Employee and Contractor Data: The law exempts data processed "by an individual applying to, employed by, or acting as an agent or independent contractor of a controller, processor, or third party to the extent that the data is collected and used within the context of that role". This provision recognizes the necessity of processing employee and contractor data without subjecting it to the full range of consumer data protection requirements.
3. Emergency Contact Information: Similar to other state laws, the MCPDA exempts "emergency contact information of an individual" used for emergency contact purposes. This acknowledges the importance of maintaining such information without imposing additional compliance burdens.
4. Specific Entities: The law also exempts certain entities entirely, including state government bodies, nonprofit organizations, higher education institutions, and financial institutions governed by the Gramm-Leach-Bliley Act.
5. Specific Types of Data: The MCPDA provides extensive exemptions for various types of data already regulated by federal laws, such as HIPAA-protected health information, FERPA-regulated educational data, and data governed by the Fair Credit Reporting Act.

These exemptions reflect a pragmatic approach to data protection, acknowledging that certain types of data processing are either necessary for basic operations, serve important safety purposes, or are already adequately regulated by other laws.

Implications

1. Threshold Calculations: When determining whether they meet the 50,000 or 25,000 consumer thresholds for MCPDA applicability, businesses must carefully assess which consumer data falls under these exemptions. This may require detailed data mapping and categorization processes.
2. Employee and Contractor Data: Organizations can process employee and contractor data without being subject to the full requirements of the MCPDA for this specific data. This is particularly relevant for businesses with a significant workforce or those relying heavily on contractors.
3. Emergency Contacts: Similar to employee data, organizations can maintain emergency contact information without being subject to the full requirements of the MCPDA for this specific data.
4. Sector-Specific Exemptions: Certain sectors, such as healthcare providers, educational institutions, and financial services, may find significant portions of their data processing activities exempt from the MCPDA due to the prevalence of federal regulations in these areas.
5. Partial Applicability: It's important to note that these exemptions are purpose-specific or entity-specific. If a company processes data for multiple purposes, including but not limited to those exempted, the law may still apply to the non-exempt processing activities.
6. Compliance Strategy: Businesses operating in Montana need to develop a nuanced compliance strategy that accounts for these exemptions. This may involve segregating data processing activities based on their exempt or non-exempt status.
7. Data Minimization: While certain processing purposes and entities are exempt, businesses should still consider applying data minimization principles to these categories to align with best practices in data protection and to prepare for potential future regulatory changes.