Electronic Signatures: Are There Any Legal Risks?

As many employers have moved to a hybrid environment with many remote workers, the question has arisen as to how employees can execute required documents. Employers are using electronic signature software such as DocuSign or online HR systems such as BambooHR or Paylocity. In the past few years employers have not really thought about whether these electronic signatures portend any legal issues.

In a recent decision in Isabel Garcia v. Stoneledge Furniture LLC, et al., a California Court of Appeal made a significant ruling concerning authentication of electronic signatures in arbitration agreements. This ruling has implications for California employers who seek to enforce arbitration agreements in the employment context as well as other documents including employee handbook acknowledgments.

To strengthen the validity of electronically signed documents, such as arbitration agreements, employers should implement measures that demonstrate the intended employee actually signed the agreement. Such measures could include:

• Sending a link to the employee’s personal email for document access;
• Allowing the employee to create a unique username and password, and ensuring the employer cannot access or change these credentials through any means;
• Confirming managerial employees do not have access to alter pre-hire documents;
• Ensuring the employer does not have access to change the employee’s password and that such requests are handled through a third party to change the password if forgotten;
• Requiring the employee to provide written consent to use an electronic signature;
• Tracking the IP address used to access and complete the documents, as confirming the date and the IP address provides a digital audit trail that reflects the time, location and network from which the signature was made;
• Recording the date and time of each electronic signature;
• Sending a confirmation email listing and providing copies of all signed documents;
• Having a manager or human resources employee witness the electronic signatures; and
• Ensuring the procedure to obtain electronic signatures is consistent with respect to all documents.

In the alternative, employers may consider obtaining a wet signature on arbitration agreements and other documents that are likely to be at issue in litigation.

As always if you have any questions about this new law or any HR issue please contact JorgensenHR at 661-600-2070 or info@jorgensenhr.com.

Source: Atkinson, Andelson, Loya, Ruud & Romo