If your organization's payroll provider mishandles employee data, who is responsible? What are the next steps? Where do we go from here? Your data processing agreement (DPA) decides. But what is a DPA, and how do you write DPA clauses and agreements in a way that protects and strengthens business relationships? Let's explore that in this blog!
What Is a DPA?
A DPA is a type of contract that sets the rules for how a vendor handles personal data on behalf of your organization. You need a DPA in place. No exceptions. Under applicable data protection laws like GDPR (Regulation EU 2016/679), the California Consumer Privacy Act, and the Data Protection Act 2018, DPAs are required. They protect so-called "natural persons" - the real people behind data.
Think of a DPA as the "classroom rules" for your data - what's allowed and rewarded, or what's off-limits and punished.
Why DPA Clauses Matter
A lack of clear DPA clauses can lead to several avoidable consequences, including loss, alteration, or unauthorized disclosure of data. Additionally, data breaches are urgent matters - we are dealing with real human beings, after all! As such, your DPA should require vendors to notify your organization promptly of any breaches, without undue delay. Additionally, if data moves internationally, your DPA must cover safeguards and the data importer's role.
As an example, imagine your CRM vendor syncs EU leads to a United States server. If something goes wrong, your DPA asks, "Who is going to do something about this?" and "How fast will this be?"
Key Clauses Every DPA Should Have
Regulators and counterparties love clarity. Include clear drafts of the following clauses.
- Nature of Processing: This clause spells out what data will be processed, along with "why" and "for how long." An example would be payroll data for salary payments until employment ends.
- Categories of Data Subjects: This clause lists who is affected - employees, customers, and vendors.
- Technical & Organizational Measures: These clauses provide details on encryption, MFAs, and backups.
- Transfer of Personal Data & International Data Transfers: These clauses explain safeguards for cross-border transfers and the data importer's duties - as mentioned before.
- Data Protection Impact Assessment: These clauses outline the required cooperation for DPIAs (Data Protection Impact Assessments) when processing is high-risk.
Common Mistakes in DPAs and DPA Clauses
Regulators hate ambiguity; you will hate it too in the event of an audit. As such, let's avoid these common mistakes:
- Using vague phrases such as "from time to time."
- Ignoring international data transfers.
- Missing breach timelines.
How CLM Software Helps With DPAs & DPA Clauses
Contract management software solutions - such as CobbleStone Software - can support DPAs and associated clauses in several different ways.
- Clause Libraries & Templates: Use pre-approved contract templates and clause libraries. Store DPA-specific clauses that align with applicable data protection laws, like GDPR and CCPA. This makes it easy to assemble compliant agreements.
- Configurable Workflows & Alerts: Set up automated workflows for approvals. This is perfect for vetting technical and organizational measures (TOMs). You can also create email and calendar alerts for deadlines related to subprocessors, data importer updates, or cross-border review checks.
- AI-Backed Clause Reviews: Advanced contract intelligence, such as CobbleStone's VISDOM® AI engine, quickly extracts key fields and checks clauses during drafting. In turn, it can spot missing TOMs or vague phrasing. It also highlights deviations from your standard DPA clauses.
- Audit Trails & Reporting: Each action taken - from clause edits to approval steps - is logged in a scannable audit trail. Built-in analytics and reporting allow you to demonstrate compliance with TOMs, international data transfers, or breach notification obligations.
- Vendor & Subprocessor Management: CLM software centralizes vendor and subprocessor records and links them seamlessly to contracts. This setup makes it easy to track which data importer obligations are flowing downstream and verify controls during renewals.
- E-Signature & Post-Execution Controls: Once a DPA is signed, CLM software transitions it to post-execution workflows - tracking key dates and changes without the need for manual oversight.
Key Takeaways
- DPAs are not just paperwork - they are your data safety net.
- Start by defining the nature of the processing and tightening safeguards around any transfer of personal data.
- Book a free demo of award-winning contract management software today!
*Legal Disclaimer: This article is not legal advice. The content of this article is for general informational and educational purposes only. The information on this website may not present the most up-to-date legal information. Readers should contact their attorney for legal advice regarding any particular legal matter.