As cyberattacks grow more sophisticated and widespread, businesses are facing unprecedented pressure to secure employee and customer information. But when a company becomes the victim of a data breach, the fallout often extends beyond financial loss and reputational damage. Increasingly, employees—both current and former—are turning to the courts, arguing that their employers failed to protect their personal data.
This raises an important question: Can employees sue a company that itself was the victim of a cyberattack?
The answer is yes—and it’s becoming more common.
Why Employees Are Suing Their Employers After Data Breaches
i) Employees entrust their employers with a substantial amount of sensitive information, including:
ii) Social Security numbers
iii) Home addresses and birthdates
iV) Direct-deposit banking details
V) Medical and insurance records
Vi) Tax forms and employment history
If this data is exposed during a cyberattack and later misused, employees may face identity theft, financial fraud, and long-term damage to their credit history. When they feel the employer failed to use reasonable security measures, lawsuits tend to follow.
On What Legal Grounds Can Employees Sue?
Legal claims may vary by region, but most employee data breach lawsuits rely on one or more of the following arguments:
1. Negligence- Employees may argue that the company failed to implement industry-standard cybersecurity protections.
Other Examples include: Outdated software, Lack of encryption, Not patching known vulnerabilities, Poor monitoring or delayed response to breaches
2. Breach of Contract
If an employer promises to protect employee information—either in an employment agreement or a privacy policy—failing to do so may be treated as a breach.
3. Violations of Data Protection Laws
Depending on the jurisdiction, companies may face lawsuits under laws such as: GDPR (Europe), CCPA/CPRA (California), Various state-level data privacy regulations.
These laws often require companies to safeguard personal data and notify affected individuals promptly.
4. Invasion of Privacy
Employees may argue that mishandling their sensitive information constitutes an invasion of their privacy rights.
Does It Matter That the Company Was Also a “Victim”?
Legally, being the victim of a cybercrime does not automatically excuse a company from responsibility.
Courts usually focus on whether the company took reasonable steps to protect its data in the first place.
If a breach results from:
known vulnerabilities the company ignored
outdated systems
failure to follow cybersecurity best practices
…then employees may have a strong case, even if the hackers were primarily to blame.
However, if a company can demonstrate that it used strong, up-to-date security measures and the attack was truly unforeseeable, courts may view the breach differently.
Examples of Employees Suing Their Employers
Employee lawsuits have risen significantly in recent years as high-profile data breaches become more common. Cases have targeted:
Media companies
Hospitals and healthcare organizations
Financial institutions
Universities
Major corporations using vulnerable third-party software
In many instances, employees have successfully secured:
financial settlements
identity theft protection services
compensation for credit monitoring
damages for emotional or financial harm
Why Former Employees Can Also Sue
Data belonging to former employees is often stored in corporate systems for many years. If those records are exposed, former staff members have the same rights as current employees to pursue legal action.
Courts generally agree: if a company retains your data, it must protect it.
What Companies Should Learn From This Trend
Employee data breach lawsuits are becoming a major legal risk.
To reduce exposure, companies must:
Maintain strict cybersecurity practices
Patch vulnerabilities promptly
Limit the retention of personal data
Use encryption and access controls
Provide transparent and timely breach notifications
Vet third-party software suppliers carefully
Cybersecurity is no longer just an IT issue—it’s a core part of employment law and corporate accountability.
Conclusion
Yes, employees can—and increasingly do—sue companies that suffer data breaches, even when the company is also a victim. If employers fail to provide reasonable protections for sensitive information, they can be held legally liable.
As cyber threats continue to evolve, the responsibility on organizations to safeguard employee data has never been greater. The legal landscape is shifting, and companies must adapt quickly to avoid becoming the next target—not just for hackers, but for lawsuits.