Employee HIPAA Violations: Comprehensive Penalty Guidelines
Employee HIPAA violations can lead to fines, termination, or even criminal charges. Learn about common infractions, penalties, and how to prevent them.
Handling protected health information (PHI) comes with strict responsibilities under the Health Insurance Portability and Accountability Act (HIPAA). Whether in healthcare, insurance, or another covered industry, healthcare organizations and business associates must ensure employees follow HIPAA regulations to avoid unauthorized access, improper disclosures, or negligent data handling.
When an employee violates HIPAA—whether through negligence or intentional misconduct—the consequences can be serious, ranging from internal disciplinary actions to civil fines or even criminal charges. Understanding the penalties employees face for HIPAA violations helps you enforce policies effectively and reduce risk.
In this article, we cover common infractions, the penalties they carry, and best practices for preventing violations before they happen so you can protect sensitive patient data, maintain HIPAA compliance, and avoid costly legal consequences.
New to HIPAA? We’ve created a HIPAA compliance checklist resource to help you kick off your compliance journey.
What Constitutes an Employee HIPAA Violation?
HIPAA violations occur when employees improperly handle protected health information (PHI), whether through negligence (e.g., failing to secure patient information), lack of awareness (e.g., accidentally emailing PHI to the wrong address), or intentional misconduct (e.g., accessing patient data without a business need). These violations vary in severity, but all can result in disciplinary action, fines, or legal consequences.
Below are the most common types of employee HIPAA violations.
Unauthorized Access
Unauthorized access occurs when employees view patient records without a legitimate work reason. A nurse who checks a celebrity patient's medical history out of curiosity instantly violates HIPAA, even without sharing the information. Medical staff who look up test results for family members, neighbors, or coworkers break federal law regardless of their intentions.
Improper Disclosure of PHI/ePHI
Sharing PHI/ePHI without patient authorization is a HIPAA violation, whether intentional or accidental. This includes discussing patient details in public areas, posting about patients on social media, or sending medical information through unsecured channels like personal email or text messages.
Even seemingly harmless conversations—such as mentioning a patient’s condition to a colleague who isn’t involved in their care—can constitute improper disclosure. Employees must always use secure, approved communication channels and be mindful of their surroundings when discussing patient information.
Negligent Handling of Records
HIPAA violations also occur when employees fail to protect physical or digital patient records. Common mistakes include:
Leaving printed documents in public areas or on unattended desks.
Failing to properly dispose of PHI (e.g., throwing paper records in regular trash instead of shredding).
Sending patient information to the wrong recipient via fax or email.
Record mismanagement increases the risk of data breaches, which can lead to regulatory penalties for both employees and organizations.
Failure to Secure Data
Healthcare workers and employees of HIPAA-covered entities must take steps to safeguard digital PHI. Using weak passwords, sharing login credentials, leaving workstations unlocked and unattended, storing patient data on unencrypted personal devices, and failing to recognize phishing emails all constitute HIPAA violations.
Civil vs. Criminal HIPAA Penalty Structures
HIPAA violations fall into two distinct penalty categories with separate enforcement paths and consequences:
Civil penalties address violations ranging from accidental to willful, with financial penalties that increase based on severity.
Criminal penalties target deliberate violations where protected health information (PHI) is knowingly misused, resulting in both fines and potential jail time.
The Department of Health and Human Services (HHS) Office for Civil Rights (OCR) handles civil cases, while the Department of Justice (DOJ) prosecutes criminal violations.
Civil Penalty Tiers
The Office for Civil Rights uses a structured four-tier system to determine appropriate penalties based on the violator's knowledge and response:
Tier 1 applies to unknowing violations where the employee couldn't reasonably have known they violated HIPAA. These penalties range from $100 to $50,000 per violation.
Tier 2 covers violations resulting from reasonable cause without willful neglect. Fines increase to $1,000 minimum per violation, up to $50,000.
Tier 3 addresses willful neglect that is corrected within 30 days of discovery. Penalties jump significantly to a minimum of $10,000 per violation and up to $50,000.
Tier 4 represents the most severe civil penalties for willful neglect without timely correction. Each violation costs a minimum of $50,000, potentially reaching a maximum penalty of $1.5 million annually.
These penalty amounts are subject to annual adjustments to account for inflation. Under the Federal Civil Penalties Inflation Adjustment Act, the Office of Management and Budget (OMB) determines an annual multiplier that federal agencies must apply to civil monetary penalties.
The updated penalty amounts are published in the Federal Register and take effect upon release. For 2025, the OMB has set the inflation multiplier at 1.02598, meaning fines will increase accordingly to maintain their deterrent effect.
2019 OCR Notice of Enforcement Discretion and Adjusted Penalty Caps
In 2019, the HHS reviewed the HITECH Act’s penalty structure and determined that the previous interpretation had incorrectly applied the same maximum annual penalty across all four tiers. As a result, the HHS concluded that the $1.5 million cap (adjusted for inflation) should only apply to the most serious Tier 4 violations.
The HHS announced that the OCR would exercise enforcement discretion when applying annual penalty caps. Under this Notice of Enforcement Discretion (NED), the OCR implemented revised annual caps for each tier:
Tier 1 (Unknowing/ Lack of Knowledge) : $100 to $25,000 per violation (annual cap)
Tier 2 (Reasonable Cause): $1,000 to $100,000 per violation (annual cap)
Tier 3 (Willful Neglect, Corrected): $10,000 to $250,000 per violation (annual cap)
Tier 4 (Willful Neglect, Not Corrected): $50,000 to $1.5 million per violation (annual cap)
Since this change was issued through discretionary enforcement rather than formal rulemaking, it isn’t legally binding and remains in effect indefinitely. However, organizations and employees should be aware that the OCR still has the authority to revert to the original penalty caps or increase penalties through future rulemaking.
Criminal Penalty Tiers
Criminal penalties apply when employees knowingly misuse protected health information (PHI). The Department of Justice directly prosecutes individuals regardless of their employer's knowledge or involvement:
The first criminal tier punishes basic knowing violations—deliberately accessing or sharing protected information without authorization. Penalties include fines up to $50,000 and imprisonment for up to one year.
The second tier targets violations committed under false pretenses, with penalties escalating to fines up to $100,000 and imprisonment for up to five years.
The third and most severe criminal tier punishes violations committed with intent to sell, transfer, or use PHI for commercial advantage, personal gain, or malicious harm. Penalties increase to fines up to $250,000 and imprisonment for up to ten years.
The Consequences of Employee HIPAA Violations
Not all HIPAA violations warrant termination, but some infractions justify immediate dismissal, while others require progressive disciplinary action. The decision to terminate should be based on factors such as:
Intent: Was the violation accidental, negligent, or intentional?
Severity: Did the breach expose sensitive patient data? Was there any harm to the patient or organization?
History of compliance issues: Has the employee received previous warnings?
Legal and regulatory impact: Does the violation trigger an OCR investigation, civil fines, or criminal charges?
Your organization must document each violation, assess the risk it presents, and apply discipline consistently to reinforce compliance expectations.
While termination is appropriate for severe infractions, progressive discipline can correct minor or first-time violations. A structured disciplinary process helps enforce compliance policies fairly and provides employees with the opportunity to improve. This can look like:
Verbal warning: Address minor mistakes, such as failing to log out of a workstation or unintentionally discussing PHI in a public area.
Written warning: Document repeated or moderate infractions, such as sending PHI to the wrong recipient or ignoring cybersecurity protocols.
Suspension or retraining: Require additional HIPAA training or temporarily suspend employees who continue to violate policies.
Termination: Dismiss employees who commit serious violations, such as unauthorized access, data theft, or repeated non-compliance.
A consistent approach to HIPAA enforcement protects your organization from accusations of unfair treatment and ensures compliance expectations are clear at all levels.
How to Prevent Employee HIPAA Violations
Employees handle sensitive health information every day, and mistakes—whether accidental or intentional—can lead to major compliance failures. A strong prevention strategy focuses on education, security, and accountability, making HIPAA compliance part of daily operations rather than a one-time concern.
Implement Ongoing Training Programs
HIPAA does not prescribe a specific training program, but covered entities are legally required to educate their workforce on compliance. The HIPAA Privacy Rule mandates that all employees receive training on the organization’s policies and procedures, ensuring they understand how to handle protected health information (PHI) in their daily responsibilities. Additionally, the HIPAA Security Rule requires organizations to implement a security awareness and training program for all employees, including management.
Effective HIPAA training must be practical, engaging, and regularly updated. Your employees should understand not just what HIPAA requires, but why compliance matters and how violations can occur in real-world scenarios. A strong training program includes:
Initial onboarding training: Every new hire should receive comprehensive HIPAA compliance training before they begin handling PHI.
Ongoing refresher courses: Annual or biannual training sessions help reinforce key principles and address evolving threats such as phishing scams or insider data breaches.
Role-specific training: Employees in different departments interact with PHI in different ways. A nurse accessing electronic medical records needs different training than an administrative staff member handling billing information. Tailoring training to specific job functions makes it more relevant and effective.
Incident response education: Your employees should be trained not only to prevent violations but also to recognize and report potential breaches. A good understanding of internal reporting procedures ensures that violations are addressed swiftly before they escalate.
With ongoing, relevant, and role-specific training, your organization reduces the risk of accidental breaches, improves patient data security, and demonstrates commitment to HIPAA compliance during audits and investigations.
Enforce Strict Access Controls
Limiting employee access to protected health information (PHI) is one of the most effective ways to prevent HIPAA violations. Under HIPAA’s “minimum necessary” standard, employees should only access the PHI required for their specific job responsibilities (e.g. a billing specialist doesn’t need to see full patient records, and a receptionist doesn’t need access to lab results).
User access should be granted based on job roles, reviewed regularly, and adjusted as needed. Multi-factor authentication adds another layer of protection, ensuring that stolen or weak passwords alone can’t grant access to protected health information (PHI).
Monitor Systems for Compliance Violations
HIPAA violations aren’t always obvious. Employees don’t have to be caught selling patient data or snooping on celebrity medical records for a compliance issue to arise. Something as small as forgetting to log out of a workstation, sending patient information over an unsecured email, or discussing sensitive details where others can overhear can all lead to violations.
Proactive monitoring helps catch these mistakes before they become major incidents. Tracking PHI access, reviewing logs, and using automated alerts to flag suspicious behavior makes it easier to spot potential issues early on.
If a violation does occur, a clear response plan ensures employees know how to report it, and compliance teams can act quickly to contain the risk. A strong reporting process should encourage employees to come forward without fear of retaliation—it's better to address a minor mistake than to deal with a full-scale breach later.
Strengthen Data Security Practices
Even the best training and strictest policies can’t prevent every mistake. That’s why strong security measures are essential to reducing the impact of human error.
Encryption protects patient data whether it’s stored or transmitted, making it unreadable even if intercepted. HIPAA-compliant communication tools prevent sensitive information from being sent over personal email or messaging apps. Physical records should be stored securely, disposed of properly, and never left unattended.
Technology also plays a role in protecting PHI from unauthorized access. Workstations should lock automatically after a period of inactivity, preventing prying eyes from seeing patient data left on a screen. Employees should be trained to recognize phishing attempts and social engineering tactics, two of the most common ways attackers gain access to sensitive information.
The stronger the security measures, the harder it is for a single mistake to turn into a compliance disaster.
Stay Ahead of HIPAA Compliance With Drata
More than just avoiding fines, keeping up with HIPAA compliance is about protecting patient trust and keeping your organization running smoothly. Preventing violations requires clear policies, ongoing training, and security measures that actually work in practice, not just on paper. When employees know what’s expected and have the right tools in place, the risk of costly mistakes drops significantly.
Still, manually tracking compliance leaves too much room for human error. Drata automates key compliance tasks, continuously monitors PHI access, and simplifies audit prep so you’re not scrambling when an issue arises. Instead of reactive compliance, you get real-time insights that help prevent violations before they happen.
Schedule a demo to see how Drata can help your organization stay ahead of HIPAA requirements.
HIPAA Employee Violations Frequently Asked Questions (FAQs)
Below we answer some of the most common questions about employee HIPAA violations.
What Are the Civil Penalties for HIPAA Violations?
Civil penalties for HIPAA violations vary based on the severity and nature of the violation. The Office for Civil Rights (OCR) enforces penalties under four tiers:
Tier 1 – Lack of Awareness: Applies when an employee was unaware of the violation and could not have reasonably avoided it. Fines range from $100 to $50,000 per violation.
Tier 2 – Reasonable Cause: Covers violations due to negligence but without willful neglect. Fines range from $1,000 to $50,000 per violation.
Tier 3 – Willful Neglect (Corrected): Applies when an employee knowingly violates HIPAA but takes corrective action within the required timeframe. Fines range from $10,000 to $50,000 per violation.
Tier 4 – Willful Neglect (Uncorrected): The most severe category, applying when a violation is committed intentionally and remains uncorrected. Fines are $50,000 per violation, with an annual cap of $1.5 million.
These penalties are adjusted annually for inflation based on a multiplier set by the Office of Management and Budget (OMB). The most current fine amounts are published each year in the Federal Register.
What Are the Criminal Penalties for HIPAA Violations?
Criminal penalties apply when employees intentionally misuse protected health information (PHI). The Department of Justice (DOJ) categorizes HIPAA crimes into three tiers:
Negligent PHI Handling: Up to one year in jail and a $50,000 fine.
Accessing PHI under False Pretenses: Up to five years in jail and a $100,000 fine.
Using PHI for Personal Gain or Malicious Intent: Up to ten years in jail and a $250,000 fine.
Criminal cases often involve identity theft, fraud, or selling patient data. Employees who violate HIPAA at this level may also face state-level charges and professional license revocation.
Are Accidental Disclosures Penalized the Same as Intentional Breaches?
No. Accidental disclosures, such as sending PHI to the wrong recipient or discussing patient details in an unsecured setting, are generally treated as civil violations.
Organizations must document the incident, assess the risk, and determine whether it qualifies as a reportable breach under the HIPAA Breach Notification Rule. If the disclosure is due to negligence or repeated policy violations, employees may face disciplinary action, but not criminal charges.
Do Employers Usually Terminate Employees for a Violation of HIPAA?
It depends on the severity and intent of the violation. Many organizations follow a progressive discipline approach, which includes verbal warnings, written reprimands, retraining, and suspension before termination. However, serious violations—such as intentional data theft, repeated unauthorized access, or improper PHI disclosures—often result in immediate termination and potential legal action.
How Can Organizations Prevent Employee HIPAA Violations?
Organizations can prevent HIPAA violations by implementing ongoing training, strict access controls, proactive monitoring, and a strong compliance culture.
