Data Processing Agreement (DPA) Definition

What Is a DPA in HR and Payroll

A Data Processing Agreement (DPA) is a legally binding contract between a data controller (the employer) and a data processor (such as a payroll provider or HR software platform). It governs how personal data—including employee records, payroll details, and benefits information—is collected, processed, and protected.

DPA in Payroll Outsourcing

When organizations outsource payroll, the payroll provider becomes a data processor handling sensitive employee information. The DPA outlines data protection measures, breach notification procedures, and compliance responsibilities under frameworks like GDPR, HIPAA, or CCPA.

Importance of a DPA in HR

DPAs ensure accountability, transparency, and trust in employee data handling. They define rights for employees (data subjects), outline retention periods, and set standards for secure storage and transfer of payroll records.