A Glossary of Key Terms: Compliance & Security in Data Handling for HR & Recruiting

In today’s rapidly evolving digital landscape, HR and recruiting professionals are at the forefront of managing sensitive personal data. From applicant tracking systems to employee records and onboarding documentation, understanding the nuances of data compliance and security isn’t just a legal requirement—it’s a fundamental aspect of building trust, mitigating risk, and ensuring operational integrity. This glossary defines essential terms, helping you navigate the complex legal and technical landscape of data handling, especially as it pertains to data transfer, automation, and safeguarding sensitive information.

General Data Protection Regulation (GDPR)

The GDPR is a comprehensive data protection and privacy law enacted by the European Union (EU) and applicable to anyone processing the personal data of individuals residing in the EU, regardless of the company’s location. It mandates strict requirements for data collection, storage, processing, and transfer, emphasizing data subject rights (e.g., right to access, rectification, erasure). For HR, GDPR compliance is critical when recruiting candidates from the EU, managing employee data across international borders, or using global HR tech platforms, requiring explicit consent mechanisms and clear data retention policies.

Health Insurance Portability and Accountability Act (HIPAA)

HIPAA is a U.S. federal law that establishes national standards to protect sensitive patient health information from being disclosed without the patient’s consent or knowledge. While primarily associated with healthcare providers, HIPAA can impact HR professionals, particularly when managing employee health records, benefits administration, wellness programs, or workers’ compensation claims. HR teams must ensure that any health-related data collected or stored is handled in accordance with HIPAA’s privacy and security rules, often requiring secure storage and restricted access within HR information systems.

ISO 27001

ISO 27001 is an international standard for information security management systems (ISMS). It provides a systematic approach to managing sensitive company information so that it remains secure, encompassing people, processes, and technology. Achieving ISO 27001 certification demonstrates an organization’s commitment to robust data security practices, which is increasingly important for HR departments handling vast amounts of PII (Personally Identifiable Information). Implementing its framework helps HR identify and mitigate information security risks related to recruiting, onboarding, and employee data management, ensuring data integrity and confidentiality.

Encryption

Encryption is the process of converting information or data into a code to prevent unauthorized access. It’s a fundamental security measure where data, whether at rest (stored) or in transit (being transferred), is transformed using an algorithm and a key, making it unreadable to anyone without the correct key. In HR, encryption protects sensitive candidate resumes, employee personal files, payroll data, and confidential communications, especially when integrating with third-party HRIS or transferring data between systems. Implementing end-to-end encryption for data transfers is a best practice to protect against breaches.

Multi-Factor Authentication (MFA)

Multi-Factor Authentication (MFA) is a security system that requires users to verify their identity using multiple methods from independent categories of credentials before granting access to an account or system. This typically involves something the user knows (e.g., password), something the user has (e.g., a phone or hardware token), and/or something the user is (e.g., a fingerprint or facial scan). MFA significantly enhances security for HR platforms, applicant tracking systems, and other tools containing sensitive data, making it much harder for unauthorized individuals to gain access even if they steal a password.

Data Sovereignty

Data sovereignty is the concept that digital data is subject to the laws and governance structures of the nation in which it is collected or processed. This means that data stored in a particular country is governed by that country’s laws, regardless of the nationality of the data’s owner. For global HR and recruiting teams, data sovereignty can dictate where employee and candidate data must be physically stored and processed, impacting cloud service providers and data transfer agreements. It’s crucial for HR automation strategies to consider data residency requirements to avoid legal and compliance pitfalls.

Personally Identifiable Information (PII)

Personally Identifiable Information (PII) refers to any data that can be used to identify a specific individual. Examples include names, addresses, phone numbers, email addresses, social security numbers, biometric data, and even IP addresses or unique device identifiers when linked to a person. HR departments routinely collect, process, and store vast amounts of PII from applicants and employees. Protecting PII is central to all data privacy regulations, requiring strict controls over access, storage, and disposal to prevent identity theft and privacy breaches.

Data Breach

A data breach is a security incident in which sensitive, protected, or confidential data is accessed, copied, transmitted, viewed, stolen, or used by an unauthorized individual. Data breaches can have severe consequences for an organization, including significant financial penalties, reputational damage, and loss of trust. For HR, a data breach involving employee or candidate PII can lead to legal action, compliance violations, and severe disruption. Robust security protocols, employee training, and a clear incident response plan are essential to prevent and manage potential breaches effectively.

Consent

In data privacy, consent refers to a data subject’s explicit permission for their personal data to be collected, processed, or shared for specific purposes. Under regulations like GDPR, consent must be freely given, specific, informed, and an unambiguous indication of the data subject’s wishes. For HR and recruiting, this means obtaining clear consent from candidates and employees before collecting their PII, explaining exactly how their data will be used, stored, and shared. Automation systems must be configured to capture and record consent properly, especially for background checks or data transfers.

Data Retention Policy

A data retention policy is an organization’s established protocol for keeping information for a specific period and then disposing of it. These policies dictate how long different types of data (e.g., applicant resumes, employee records, payroll information) must be stored to meet legal, regulatory, and business requirements. For HR, adhering to a data retention policy is vital for compliance, preventing the unnecessary storage of sensitive data beyond its legal or business need, thereby reducing the risk of a data breach and complying with “right to be forgotten” requests.

Data Minimization

Data minimization is a principle of data protection that states organizations should only collect, process, and store the absolute minimum amount of personal data necessary to achieve a specified purpose. It’s about being intentional and efficient with data collection. In an HR context, this means not asking for irrelevant information on application forms, only retaining necessary employee details, and regularly reviewing data collection practices. By minimizing the data held, organizations reduce their risk exposure in case of a breach and simplify compliance with privacy regulations.

Third-Party Risk Management

Third-party risk management (TPRM) is the process of identifying, assessing, and mitigating risks associated with external vendors, suppliers, and service providers who have access to an organization’s data or systems. HR departments frequently engage with third parties, such as applicant tracking systems (ATS), background check providers, payroll services, and benefits administrators, all of whom handle sensitive employee data. Robust TPRM involves thoroughly vetting these vendors’ security practices, ensuring compliance with data protection laws, and establishing clear contractual obligations to safeguard data.

Access Control

Access control is a security technique that regulates who or what can view or use resources in a computing environment. It involves authentication (verifying identity) and authorization (granting specific permissions). For HR systems, effective access control ensures that only authorized personnel can access sensitive employee records, payroll information, or confidential candidate data. Implementing role-based access control (RBAC) allows HR to define specific permissions for different roles (e.g., recruiters, HR managers, payroll specialists), minimizing the risk of unauthorized data exposure.

Anonymization and Pseudonymization

Anonymization is the process of stripping personal data of identifying characteristics so that the data cannot be attributed to an identified or identifiable natural person. Pseudonymization, a less severe form, replaces identifying information with artificial identifiers (pseudonyms) to protect the data subject’s identity while still allowing for re-identification if a key is used. Both techniques are crucial for HR, particularly when analyzing aggregated data for trends, diversity reports, or automation insights without exposing individual identities, thus enhancing privacy and compliance.

Compliance Frameworks

Compliance frameworks are structured guidelines, policies, and procedures that an organization adopts to meet regulatory requirements and industry standards. These frameworks provide a roadmap for managing risk, implementing security controls, and ensuring legal adherence. Examples include NIST (National Institute of Standards and Technology) Cybersecurity Framework, SOC 2 (Service Organization Control 2), and HITRUST CSF. For HR, aligning with relevant compliance frameworks helps establish a robust data governance strategy, ensuring that all data handling processes from recruiting to offboarding meet required legal and ethical benchmarks.

If you would like to read more, we recommend this article: CRM Data Protection for HR & Recruiting: Mastering Onboarding & Migration Resilience