Liability, Property, and Inalienability Rules in Employee Data Regulation

Legal protections for workers’ data have usually taken the form of privacy protections designed to deter data processing that is excessive or invasive. Such protections generally fall into the category of liability rules, under which rights can be infringed as long as compensation is provided for the violation. As Guido Calabresi and A. Douglas Melamed have described in “Property Rules, Liability Rules, and Inalienability: One View of the Cathedral,” liability rules are contrasted with either property rules that prevent the involuntary transfer of rights or inalienability rules that prohibit rights transfers altogether. This article explores how property rules and inalienability rules could provide better protections for employee data rights in certain contexts. Property rules would allow employees to maintain control over their data, requiring employers to negotiate for its use rather than unilaterally collecting and processing it. Inalienability rules could shield particularly sensitive categories of worker data — such as biometric information or private communications — by imposing strict limitations and severe penalties on their collection and use. By rethinking the rules governing employee data, this article advocates for a more equitable approach of mixed regulatory approaches, alternatively providing workers with compensation, greater economic power, or legal barriers to any potential processing.