Keith Mack
Private companies are legally permitted to establish their own regulations and guidelines, which can include censorship and the banning of members. However, this does not mean that they can ignore state law. While the First Amendment protects freedom of speech from government censorship, it does not include private citizens, businesses, or organizations. This means that private companies can face legal consequences for their actions if they violate state laws, such as in the case of segregation in private businesses, where the Court has found state participation in enforcing segregation in restaurants and lunch counters. Additionally, new state privacy laws introduce deviations from existing privacy laws, with variations based on factors like data volume and company revenue from selling data.
| Characteristics | Values |
|---|---|
| Private companies can establish their own regulations and guidelines | Private companies can legally establish their own regulations and guidelines, including content censorship or banning members |
| First Amendment protection | The First Amendment only protects against government censorship, not censorship by private citizens, businesses, or organizations |
| State privacy law variations | State privacy laws vary based on data volume, company revenue from data sales, and exemptions for certain entities |
| Affirmative defense | Tennessee's privacy law allows affirmative defense for businesses with privacy policies aligning with NIST or other certified data protection frameworks |
| Right to question profiling | Minnesota's privacy law grants consumers the right to understand and challenge profiling decisions |
| Right to transparency | Minnesota, Delaware, and Maryland privacy laws allow consumers to request information on third parties with access to their data |
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What You'll Learn
Private companies can legally censor speech
Private companies and citizens are not subject to the same laws as federal, state, and local governments. The First Amendment, for example, protects citizens from government censorship, but it does not include private businesses and organizations. This means that private companies can legally censor speech and content.
Private companies are legally permitted to establish their own regulations and guidelines, including censorship of content and the banning of members. For instance, a private school can discipline students for criticizing school policies, a private business can terminate an employee for expressing political views at work, and a private media company can refuse to publish opinions it disagrees with.
The widespread use of social media platforms has further complicated the issue of free speech. Social media platforms are private companies and are thus legally permitted to censor content. Section 230 of the 1996 Communications Decency Act shields these companies from being held legally responsible for user-generated content. This has led to debates about whether social media platforms have abused their power in censoring content.
While the Constitution does not address private discrimination, the Court has intervened in cases where state governments have been complicit in discriminatory practices within private businesses. For example, in Burton v. Wilmington Parking Auth. (1961), the Court held that the state had "made itself a party to the refusal of service" by permitting discriminatory uses of its property. Similarly, in Robinson v. Florida (1964), the Court found that Florida's segregation regulations violated equal protection by discouraging integrated dining.
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State involvement in private business segregation
While the US Constitution does not address private discrimination, the Court will act if the state is found to be significantly involved in it. In the case of Burton v. Wilmington Parking Auth. (1961), the Court held that the state had become a party to the refusal of service by permitting discriminatory uses of its property. This set a precedent for finding state participation in segregating private businesses.
In the 1960s, the Court decided several cases involving state involvement in private business segregation. In Peterson v. City of Greenville (1963), the Court reversed trespass convictions for Black boys and girls who sat at a "whites-only" lunch counter, as a city ordinance required separate dining facilities. The Court also reversed convictions for patrons who refused a manager's instructions to leave a "whites-only" restaurant in Florida, citing the state board of health's requirement for racially separate toilet facilities.
In another case, Robinson v. Florida (1964), the Court held that Florida's segregation regulations discouraged integrated dining and violated equal protection. Similarly, in Lombard v. Louisiana (1963), the Court overturned convictions for Black patrons who refused to leave a segregated lunch counter, citing the state's endorsement of local segregation customs.
The Court has consistently found state action and constitutional violations when states, through their policies, regulations, or inaction, enable or encourage segregation in private businesses. This demonstrates the state's responsibility to uphold equal protection and not involve itself in private business segregation.
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First Amendment and private company free speech
The First Amendment protects the right to free speech from government restrictions. This means that private companies can ignore certain state laws, as the First Amendment only protects speech from federal, state, and local government censorship. Private companies are not bound by the First Amendment and can impose their own restrictions on speech without violating it.
The First Amendment reads:
> "Congress shall make no law...abridging the freedom of speech."
This amendment gives Americans the right to express themselves verbally and through publication without government interference. It also prevents the government from establishing a "state" religion or favoring one religion over others.
The First Amendment does not protect against speech restrictions imposed by private entities, including private citizens, businesses, and organizations. For example, a private school can suspend students for criticizing a school policy, a private business can fire an employee for expressing political views at work, and a private media company can refuse to publish or broadcast opinions it disagrees with.
However, the Court has established limited circumstances where private actors may be considered state actors, and thus subject to the First Amendment. For instance, in cases of private businesses enforcing segregation with the support of state policies, the Court has found state action and a constitutional violation, reversing convictions for Black patrons who refused to leave a "whites-only" restaurant.
The Supreme Court has also determined that commercial speech, or speech by corporations, is entitled to First Amendment protection. This includes speech that proposes a commercial transaction or expresses the economic interests of the speaker and its audience.
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State privacy laws and business compliance
The US state privacy laws are constantly evolving, with new laws being enacted and older ones amended. This dynamic landscape poses a challenge for businesses, which must ensure compliance with the regulations of individual states. While some core responsibilities remain the same across the board, businesses must also be aware of unique state-specific obligations.
In 2019, the US data privacy framework underwent a significant shift with the California Consumer Privacy Act, which imposed a substantial compliance burden on businesses collecting personal information about California residents. This development spurred other states to follow suit, and as of 2024, twenty states have passed comprehensive data privacy laws, with more in the legislative process.
The privacy laws of New Jersey, Minnesota, and Maryland, which came into effect in 2025, have introduced notable deviations from existing laws. For instance, New Jersey and Minnesota now require businesses to conduct a data protection assessment before processing high-risk data and to obtain affirmative consent from minors for processing their data for targeted advertising or profiling. Additionally, Minnesota's law implicitly requires businesses to appoint a Chief Privacy Officer (CPO), similar to the requirements under the European Union's GDPR.
To maintain compliance, businesses must stay informed about the changing privacy laws in each state. They should also be aware of the unique obligations imposed by individual states while continuing to fulfil their core responsibilities, such as providing privacy notices and implementing data security measures.
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Private companies' rights to ignore state laws
Private companies do not operate in a legal vacuum and are subject to federal, state, and local laws. However, the First Amendment only protects individuals from government censorship and does not extend to private companies, businesses, or organizations. This means that private companies can establish their own regulations and guidelines, including content censorship or banning members, without infringing on First Amendment rights.
For example, social media platforms, as private companies, can censor content or ban users based on their terms of service without violating the First Amendment. Similarly, a private school can suspend students for criticizing school policies, and a private business can fire an employee for expressing political views on the job.
While private companies have the right to set their own rules, they must also comply with applicable state laws. State laws vary, and businesses must navigate a complex landscape of data privacy, consumer rights, and other regulations that differ from state to state. For instance, Minnesota's privacy law grants consumers the right to question profiling decisions and access the data used, while Tennessee's law provides an affirmative defense for businesses that create and comply with a written privacy policy that aligns with specific standards.
Additionally, courts have held that states cannot enforce laws that abridge the privileges or immunities of US citizens or deprive them of life, liberty, or property without due process. In cases of racial segregation in private businesses, courts have found state involvement in discrimination to be unconstitutional, demonstrating that private companies cannot rely on state laws to justify discriminatory practices.
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Frequently asked questions
No, private companies cannot ignore state law. However, they do have some autonomy in establishing regulations and guidelines within their communities. For example, private companies can censor content or ban members without violating the First Amendment, as it only protects against government censorship.
State laws vary, but some common areas of regulation for private companies include data privacy, consumer rights, and non-discrimination laws. For example, Minnesota's privacy law grants consumers the right to access the data used in profiling decisions and to request a list of third parties with whom their data has been shared.
Yes, private companies can be held liable for violating state laws. For example, Tennessee's privacy law provides an affirmative defense if businesses create and comply with a written privacy policy that aligns with the National Institute of Standards and Technology (NIST) framework.
If a private company refuses to comply with a state law, it may face legal consequences, including fines, lawsuits, or other enforcement actions from the respective state's Attorney General office. Ultimately, it is in the best interest of private companies to understand and comply with the relevant state laws that apply to their operations.
