Client Advisory on Privacy and Cybersecurity | January 2026 | Enhancements in Privacy Compliance and Enforcement Risks for 2026 | Shook, Hardy & Bacon L.L.P.

A Compliance Roadmap for 2026: Navigating New State Laws and Increased Enforcement Risks

The landscape of privacy legislation is shifting dramatically, with regulators ramping up their efforts to enforce compliance and finalize stringent regulations. After a relatively calm year, 2025 marked a clear pivot as state agencies began aggressive enforcement actions. As we enter 2026, businesses must transition from a “wait and see” approach to proactive operational updates, especially regarding opt-out signals, risky processing, and sensitive data handling.

Critical Risk: Executive Liability

A notable development this year is California’s move to hold executives accountable for privacy compliance. Regulations now require a member of a business’s executive management team to attest to the accuracy of risk assessments concerning personal information processing. This change raises the stakes, transforming privacy compliance from mere operational concern to a governance issue with potential personal legal repercussions for executives.

New Compliance Tasks in 2026

As organizations brace for 2026, a variety of new compliance obligations demand attention. Here are the key tasks to prioritize:

1. Evaluate Uplifts for New and Old States
   States like Indiana, Kentucky, and Rhode Island now implement Virginia-style privacy laws, while Montana and Connecticut have broadened their requirements. Organizations must assess how these updates impact their current compliance frameworks to ensure alignment.

2. Review HR Disclosures
   Human Resources data is under heightened scrutiny. California’s recent settlements concerning HR data signal a need for compliance in this sector. Meanwhile, states like Colorado have introduced new obligations concerning biometric data processing.

3. Start Risk Assessments in California
   Businesses must conduct comprehensive risk assessments before initiating specific processing activities, such as selling personal data or handling sensitive information. For processes initiated before 2026, the deadline to complete these assessments is December 2027.

4. Map Disclosures to Vendors
   New regulations require businesses in California to disclose what personal information is shared with contractors or service providers. Companies must ensure their policies align with these requirements to avoid unnecessary risk.

5. Update Websites for Opt-Out Requests
   Compliance with opt-out requirements is crucial. In Oregon and Delaware, businesses must honor opt-out signals, while California mandates websites to confirm whether opt-out requests have been honored, enhancing consumer trust through transparency.

6. Scrutinize Precise Geolocation Data
   Recent updates in Colorado and Oregon clarify that precise geolocation data falls under sensitive data protections. Selling such data is now illegal, imposing new restrictions that businesses must carefully navigate.

Enforcement Risks and Trends for 2026

The pace of privacy law enforcement has accelerated significantly. As 2026 unfolds, expect increased scrutiny due to more stringent laws, diminishing “cure periods,” and rising pressure for regulators to take action. Several considerations are crucial for businesses focusing on legal compliance:

• Move Beyond Reactive Compliance
  The mindset of fixing issues post-violation is quickly fading. Stars like Delaware, Indiana, and Virginia offer limited grace periods, making proactive compliance essential.

• Regulating Publicly Viewable Issues
  Common violations, including convoluted opt-out processes and noncompliant privacy policies, have become prime targets for regulators. Ensuring clarity and compliance in public-facing materials is a must.

• Children’s Privacy Concerns
  With both state and federal regulators keen on children’s data privacy, businesses must align with regulations that may exceed the requirements set by the Children’s Online Privacy Protection Act (COPPA).

• Focus on Geolocation Processing
  Companies must now address precise geolocation data with caution. Legislative movements in states like Texas and California reflect a growing commitment to controlling how such data is handled.

• Increased Settlement Costs
  California has witnessed multiple settlements exceeding $1 million, a trend that should inform risk calculations. This encompasses both financial penalties and the costly repercussions of initiating remedial actions.

• Contracts Are Non-Negotiable
  Businesses are increasingly being penalized for lacking essential data protection addenda in contracts. This highlights the importance of ensuring that contractual obligations are fulfilled diligently.

Looking Ahead to 2027 and Beyond

The compliance landscape does not show signs of easing. Businesses must start preparing for what lies ahead, especially concerning the California Consumer Privacy Act (CCPA). Anticipated measures include:

• Evaluate Automated Decision-Making
  Starting January 2027, organizations making significant decisions without human involvement will be required to inform consumers and provide opt-out opportunities.

• Map Cybersecurity Audit Frameworks
  By April 2028, many businesses will need to conduct annual cybersecurity audits that involve specific requirements. Early preparation will improve compliance readiness.

Summary of Essential Actions

To navigate the complexities of compliance in 2026, businesses should consider the following actions:

• Evaluate Program Scope: Reassess existing frameworks to accommodate changes in states like Connecticut and Montana, as well as new regulations in Indiana, Kentucky, and Rhode Island.

• Audit Public Features: Conduct a thorough audit of privacy policies to ensure accuracy, clarity in consumer choices, and the seamless functionality of opt-out tools and verification processes.

• Initiate Risk Assessments: Identify and begin necessary risk assessments that may arise under California regulations.

• Educate Executives on Personal Liability: Keep executives informed about their responsibilities in relation to risk assessments, emphasizing the personal legal risks involved.

As businesses face an increasingly complex regulatory environment, taking these steps will be crucial in establishing a solid compliance foundation for 2026 and beyond.