Thursday, January 29, 2015

When Is An Electronic Signature Enough?

Back in the olden days (a decade ago), contracts were signed in ink with multiple originals.  Today electronic signatures have become the norm in many workplaces.  So how do you establish that someone electronically signed a document when there’s a dispute?

Yeah, a lot of other employers haven’t thought about that either.


A recent California decision indicates we should. In Ruiz v. Moss Brothers Auto Group, an employee filed a wage and hour class action against his employer. The employer responded by demanding the dispute be sent to arbitration. The company produced an arbitration agreement that had a dated electronic signature with Ruiz’s name on it.

Ruiz then filed an affidavit saying he “may” have signed the arbitration agreement but  (1) did not remember it, (2) would not have waived his right to file a lawsuit and (3) never received a copy of the document he was said to have signed. His lawyer argued that if the company could not provide evidence that Ruiz actually signed it, he could not be required to arbitrate.

In response, the employer provided evidence that it required all employees to log into its Human Resources system with a unique log-on ID and password, then review and sign the document. The trial court denied the petition to arbitrate and the employer appealed.

The appellate court recently affirmed the decision.  Although it acknowledged that an electronic signature has the same legal effect as a handwritten one under the Uniform Electronic Transactions Act, the court concluded that the employer did not do enough to “authenticate” the signature and, therefore, did not have proof that Ruiz consented to arbitration.

This was an unusual case for several reasons, not the least of which is the antipathy California courts have for arbitration agreements. Nonetheless, if you use (or are thinking of using) electronic signatures for important personnel documents, consider the following in addition to requiring unique log-ins and passwords:
  1. Utilize DocuSign.com, a verification process recognized as sufficient by a number of courts;
  2. Provide employees with a copy of the electronically signed documents, and require them to notify HR immediately if it is not their signature; and
  3. Create a standard written process for verifying signatures, document it, and follow it.
Posted by: Sarah Mott