Many have asked “are electronic signatures valid?”
The answer is YES.
Section 1633.7 of the California Civil Code states that an electronic signature has the same legal effect as a handwritten signature. The problem is proving who signed that electronic signature in court.
Technology has made it so easy to sign our lives away with merely the click of a mouse. It’s so easy that most of us don’t read the documents nor do we remember if we clicked our agreement.
But what happens when you as an employer wants to use that electronic signature as proof of an agreement? Are you able to establish in court that this particular employee clicked the mouse that caused the electronic signature to appear? If your answer is “no” or “probably not” you may have wasted the money you paid an attorney (or Google) to draft that arbitration or confidentiality agreement that a court will not enforce.
Just last week, my favorite California Court of Appeal issued an opinion in Ruiz v. Moss Bros. Auto Group, Inc. upholding the trial court’s finding that Moss Bros., the employer in that case, did not present sufficient evidence that the electronic signature on the arbitration agreement it was trying to enforce was “the act of Ruiz,” the employee who filed a class action lawsuit. Ruiz’s lawsuit was a pretty standard wage and hour class action, alleging that Moss Bros failed to pay Ruiz and other employees overtime and other wages for all hours worked, provide required meal and rest breaks, provide accurate and complete wage statements, reimburse business expenses, and pay final wages in a timely manner.
Moss Bros. tried to use its secret weapon and asked the court to enforce an arbitration agreement that Ruiz allegedly signed electronically but which Ruiz didn’t remember signing (but didn’t deny signing either). To prove that Ruiz “signed” the agreement, the company offered the testimony of another employee who said that the agreement was given to all employees and Ruiz “electronically signed” it. The courts took issue with the fact that she did not explain how the company verified that Ruiz indeed signed the agreement.
So you ask . . .
Why does this matter?
As an employer, you invested a lot of time and money to create agreements to protect your interests. Not being able to use those agreements because you can’t prove that an employee (or anyone for that matter) signed it is just flushing money down the drain.
In this case, Moss Bros. hoped that it could quickly and relatively cheaply resolve the dispute with one employee, whose claims may have been worth a few thousand dollars, rather than multiple claims of a large number of employees worth significantly more and therefore more expensive to defend. With the arbitration agreement thrown out the window, so did those hopes.
How do you make sure you could authenticate the electronic signature in court?
1. Use a reputable service for electronic signatures that is in compliance with the U.S. Electronic Signatures in Global and National Commerce Act.
2. Have a process in place to verify each signature such as providing each employee with a unique login ID and password when they log into the HR System, keep a list of those IDs and passwords, and sending an automated e-mail to the employee’s e-mail address to confirm the execution of each document.
3. Mostly importantly, make sure that your HR manager understands the process used to verify each employee’s electronic signature so that when called upon, that person could explain it in detail.
If you have any questions regarding the enforceability of your employment documents, feel free to contact me or call 949.529.0007.