PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Addition of Part 199 to Title 19 NYCRR.
Statutory authority:
General Business Law, art. 39-G, section 899-bbb(12)(a)
Finding of necessity for emergency rule:
Preservation of public safety and general welfare.
Specific reasons underlying the finding of necessity:
The Legislature enacted statutory authority, with an effective date of October 1, 2008, for a new licensing category regarding contractors engaged in the business of document destruction. This law requires businesses that offer document destruction services to register with the Department of State, and enables the Secretary of State to promulgate such rules and regulations as are deemed necessary to effectuate its purposes. This law is necessary for the protection of the public to prevent the unlawful taking of personal identification information from documents disposed of by the public. The law limits the amount of documents containing sensitive personal information subject to misappropriation by ensuring the availability of qualified and reputable document destruction contractors. The law will work in concert with recently implemented federal disposal rules (16 CPR Part 682), and New York’s Disposal Law (Chapter 65 of the Laws of 2006) which require businesses to take appropriate steps when disposing of personal information. In order to comply with these mandates, many businesses hire contractors that specialize in the destruction of records containing personal information. The new licensing category enacted by the NYS Legislature will ensure that information required to be destroyed under the federal Disposal Rule and New York’s Disposal Law pursuant to a document destructions contract is disposed of properly by a contractor registered with the State of New York.
Subject:
Document destruction contractors.
Purpose:
To provide guidance regarding the process of applying for, and registering as, a document destruction contractor.
Text of emergency rule:
Part 199 is added to 19 NYCRR to be entitled and read as follows:
19 NYCRR PART 199 Document Destruction Contractors
Section 199.1 Fingerprinting: principals and officers
(a) Applicants for registration as document destruction contractors must be fingerprinted, and the fingerprints must be taken by one of the following:
(1) an employee of the Department of State, Division of Licensing Services at designated locations and at appointed times, or at such other location designated by the Division of Licensing Services;
(2) a local police officer, a State police officer, a sheriff or deputy sheriff;
(3) a principal or officer of a document destruction contractor business; or
(4) a previously fingerprinted employee of security guard training school approved by the Division of Criminal Justice Services (Division).
(b) Each fingerprint card shall be signed and authenticated by the individual who took the fingerprints and shall state the individual's name along with his/her title of office or employment status.
(c) All fingerprints shall be taken on a form and in a manner approved by the Division of Criminal Justice Services.
Section 199.2 Investigation
Within five business days after receipt of an application, the Department of State (Department) shall transmit to the Division two sets of fingerprints and the fees required pursuant to subdivision eight-a of section eight hundred thirty-seven of the executive law, and amendments thereto, for the cost of the Division's full search and retain procedures. The results will be used to ascertain whether or not the applicant has been charged with or convicted of a serious offense and may cause to be conducted an investigation to verify the information contained in the application; provided, however, that the Department shall cause such investigation to be conducted for applicants whose application has not been submitted and verified pursuant to section eight hundred ninety-nine-bbb of General Business Law article 39-G. The Department, in consultation with the Division, may waive such background checks, investigations and fees if in its opinion, the applicant has been subject to previous background checks and investigation requirements which meet or exceed the requirements of this section. The Department, in consultation with the Division, may not be required to conduct background checks or investigations for applicants who are also employed as security guards or peace officers.
Section 199.3 Supervisory responsibility
A registrant/licensee has an affirmative duty to provide supervision of all employees and for all business activities. Such supervision shall consist of regular, frequent and consistent personal guidance, instruction, oversight and superintendence by the qualifying registration/license holder with respect to the general business conducted by the firm and all matters relating thereto.
Section 199.4 Business and employee records
(a) Each business licensed under this Part shall keep and maintain for a period of three years records of all transactions performed by the business.
(b) All records must be retained for longer periods, in the event there is any litigation pending concerning such records and/or employee. Litigation shall include investigation or administrative action by the Department of State, initiated by complaint from the general public or by the department.
(c) A business which is registered to conduct activities as a document destruction contractor must maintain employee and business records at a central location within New York State. This is applicable to all company and personnel records pertaining exclusively to the conduct of business in this State.
(d) Each registrant/licensee shall prepare and retain a statement of services and charges which has been agreed upon between the registrant/licensee and the consumer, a copy of which must be presented to the consumer. The consumer must be presented with a copy of any document signed by the registrant/licensee and consumer. Any agreement signed by a representative of the registrant/licensee and the consumer for services to be performed must be retained by the registrant/licensee in the business records of the firm.
(e) In conjunction with any transaction, each registrant/licensee shall identify any and all employees who conduct activities constituting document destruction services.
Section 199.5 Employee and employer responsibility
(a) Any person who is or has been an employee of a registered document destruction contractor shall not divulge to anyone other than his employer, except as may be required by law, any information acquired by him/her during such employment in respect to any of the work to which he/she shall have been assigned by such employer.
(b) It is the duty and obligation of an employer of any individual believed to have violated this section to divulge all known facts and circumstances to the Secretary of State or such person in the Department of State who may be designated.
Section 199.6 License revocation and suspension
Any person, firm, company, partnership, corporation or organization licensed under Article 39-G of the General Business Law which has its registration/license revoked or suspended by the Department of State shall be ineligible to employ other persons in any capacity to conduct document destruction services for the period of the revocation or suspension.
Section 199.7 Criminal convictions
Any applicant, principal or qualifier convicted of any felony or misdemeanor may be denied licensure or subjected to license revocation and suspension. Department of State discretion shall be exercised pursuant to the standards articulated in Article 23-A of the Correction Law.
Section 199.8 Notice of criminal conviction
Any registrant/licensee who is convicted of a crime as defined in the Penal Law in this State or an offense which would constitute a crime if committed in New York in any other state or Federal or foreign jurisdiction, shall give notice of such conviction to the Department of State, Division of Licensing Services, at its Albany Office, by certified mail, return receipt requested, within 10 days from date of conviction. Such notice shall be given notwithstanding pendency of appeal.
Section 199.9 Advertising
All advertising placed by an individual or a business registered/licensed under this article must contain the following statement: "Registered with the N.Y.S. Department of State.''
Section 199.10 Statement of licensure
All documents or receipts issued by an individual or business licensed pursuant to this article must contain the unique identification number issued to such individual or business and the phrase "Registered with the N.Y.S. Department of State.''
Section 199.11 Contracts and agreements.
(a) Consumers conducting business with an individual or firm licensed under this article shall receive a copy of any signed contract and/or agreement.
(b) All contracts and agreements used by an individual or firm licensed under this article shall include the following statement under the name of the business: "This business is registered with the New York Department of State, Division of Licensing Services.''
Section 199.12 Enforcement.
All principals, qualifiers and/or employees of the registered document destruction contractor shall be subject to the enforcement provisions contained in Article 39-G of the General Business Law. Service of process pursuant to said article, including but not limited to service of a notice of hearing to be conducted pursuant to the provisions of said article, shall be by certified mail sent to the last known registered or business address of the applicant or registered document destruction contractor.
This notice is intended
to serve only as a notice of emergency adoption. This agency intends to adopt this emergency rule as a permanent rule and will publish a notice of proposed rule making in the State Register at some future date. The emergency rule will expire September 1, 2009.
Text of rule and any required statements and analyses may be obtained from:
Linda D. Cleary, Department of State, Division of Licensing Services, 80 South Swan St., 10th Fl., Albany NY 12201, (518) 473-2728, email: linda.cleary@dos.state.ny.us
Regulatory Impact Statement
1. Statutory authority:
General Business Law Article 39-G, section 899-bbb(12)(a) authorizes the Secretary of State to promulgate such rules and regulations as are deemed necessary to effectuate the purposes of the article, which article contains new licensing/registration requirements for the discipline entitled "document destruction contractors".
2. Legislative objectives:
General Business Law, Article 39-G, requires the Department of State to license and regulate document destruction contractors. The statute requires registrants/licensees to meet certain requirements in order to qualify and maintain registration as a document destruction contractor. The statutory intent behind Article 39-G is consumer protection.
3. Needs and benefits:
The proposed rule making will protect consumers and meet the legislative intent in enacting Article 39-G. By setting forth specific regulations clarifying the procedures to be followed in obtaining approval from the Department of State to register and maintain registration as a document destruction contractor, registrants/licensees and prospective employees, as well as the public will be protected by ensuring that licensed document destruction contractors conduct their business in accordance with the principles set forth in General Business Law Article 39-G.
4. Costs:
a. Costs to regulated parties:
The rule making will not impose any new costs on document destruction contractors, beyond those imposed with their compliance with the statutory requirements of General Business Law Article 39-G. It is believed that there will be costs to the regulated public associated with obtaining the requisite NYS background check, estimated to be $75. Regarding costs for fingerprints of principals, officers, or employees of the document destruction contractor, these are estimated to be approximately $12 to $30 for each set of fingerprints prepared and obtained pursuant to these rules and the statute. The regulated public will likely incur costs associated with record retention for those licensees who do not possess sufficient on-site storage for records. The cost of storage facilities varies depending on various factors such as location and size. It is estimated that the starting price for an off-site storage unit is approximately $40.00 per month. It is not anticipated that the regulated public will incur any other costs.
b. Costs to the Department of State:
The Department of State does not anticipate any additional costs to the agency to implement and continue to administer the rule's requirements. The Department of State currently licenses and regulates in excess of twenty-eight different occupations. The Department did not hire additional staff to assist with the implementation and administration of the new document destruction contractor licensing requirements. Existing staff will also absorb the functions necessary to support the program and the rule.
5. Local government mandates:
The rule does not impose any program, service, duty or responsibility upon any county, city, town, village, school district or other special district.
6. Paperwork:
The rule clarifies the already mandated statutory requirement that all applications for licensure be accompanied by two sets of fingerprint cards for all principals and officers; prospective registrants/licensees are already required to satisfactorily complete applications for registration, with accompanying documentation. The rule delineates and specifies the paperwork and record keeping requirements imposed on licensees by General Business Law Article 39-G. The statute mandates, in part, that document destruction contractors be subject to investigation and supply documentation upon request, and this rule clarifies the requirements for document retention. The rule also requires that advertisements and certain business records contain the license number and/or a statement that the licensee is licensed by the Department of State.
7. Duplication:
This rule does not duplicate, overlap or conflict with any other state or federal requirement.
8. Alternatives:
The Department of State considered not proposing any regulations, however, since subpart 12 of § 899-bbb requires that the Secretary of State shall promulgate such rules and regulations as are deemed necessary to effectuate the purposes of the legislation, it was deemed appropriate and necessary that the Department of State propose regulations to clarify the legislation. It was decided that not having any regulations would disadvantage both the regulated public and the Department of State insofar as certain vague statutory provisions would remain undefined and result in confusion and difficulties with enforcement. As a result, the Department of State is only proposing those regulations deemed necessary at this point in time, and has determined to hold in abeyance the possible need to file additional regulations to clarify and/or define other statutory issues.
9. Federal standards:
There are no federal standards regulating the registration of document destruction contractors, although there are federal standards regulating the disposal of personal information found in a federal Disposal Rule (16 CPF Part 682), and New York has a Disposal Law (Chapter 65 of the Laws of 2006), which comports with the federal requirements. The proposed rulemaking does not exceed any existing federal standard.
10. Compliance schedule:
The rule making will be effective as of the date of adoption. Prospective registrants/licensees are already required to register pursuant to the statutory provisions of Article 39-G, on or before October 1, 2008, and are on notice of the Secretary's power to enact regulations in concert therewith, and will therefore be able to comply with this rule as of its effective date.
Regulatory Flexibility Analysis
1. Effect of rule:
The proposed rulemaking creates a framework for the successful process of businesses registering for approval to act as document destruction contractors, and to employ qualified workers to conduct services related thereto, as well as to allow for the continued qualifications for renewal of same, and the responsibilities of these companies for document preparation and retention, for ensuring the qualifications of workers, and for the standards by which such businesses shall operate.
The rule does not apply to local governments.
2. Compliance requirements:
The business of document destruction is now being regulated under the auspices of the Department of State (DOS), and any companies or persons meeting the criteria for registration must do so. The proposed rules are intended to amplify the legislation, and to clarify specific requirements for registration. Further, pursuant to the statute, the Department is required to publish and make available a list of registered document destruction contractors who have properly qualified and registered with the Department. By statute, the list of registered document destruction contractors is to be made available to any interested party by way of online viewing on the Department's website, and also by permitting an interested party to obtain a copy thereof, at a cost to be determined by the Department, which the rules now clarify to be a minimal amount. The proposed rule provides the mechanism for compliance.
3. Professional services:
Small businesses will not need professional services in order to comply with this rule.
4. Compliance costs:
Registrant licensees will not incur any significant compliance costs associated with these rules, although there will be compliance costs associated with obtaining the requisite fingerprints of the principals, officers and/or qualifiers for the registrant contractors, and for producing the proper identification cards. The rules do not mandate that any businesses will incur significant expense beyond the expenses made necessary in order to comply with the statutory requirements.
5. Economic and technological feasibility:
Small businesses will not incur any additional costs or require technical expertise as a result of the implementation of these rules, beyond the requirements already placed upon small businesses which are required to comply with the statute.
6. Minimizing adverse impact:
DOS did not identify any alternatives which would provide relief for registrant contractors and at the same time be less restrictive and less burdensome on them in terms of compliance. This rule clarifies compliance requirements.
7. Small business and local government participation:
No comment has been received to the enacted legislation, and no comment has yet been received from the anticipated registrant pool, or the public. Simultaneously with the adopting of the rulemaking as an emergency adoption, the proposed rulemaking has been posted on the Department's website in an attempt to alert any interested parties and to seek public comment.
Rural Area Flexibility Analysis
This rule does not impose any adverse impact on rural areas. The rule complements the statutory adoption of the new licensing category of document destruction contractors, such that the procedures for obtaining and renewing registration in this area of business employment will be clear and readily apparent to the public. The Department of State has not received any objection to these procedures from approved providers.
Job Impact Statement
The proposed rule will not have a substantial adverse affect on jobs and employment opportunities for licensed document destruction contractors insofar as Article 39-G of the General Business Law already requires that such qualifying companies register with the Secretary of State. This rule making merely codifies the procedure to obtain Department of State approval to offer and provide services as a registered document destruction contractor.
