Not a Member? Get access to HR news and resources that you can trust.
Change can be scary, but deploying new HR software doesn't have to be.
Is your employee handbook ready for the New Year? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Get the HR education you need without travel expenses or time out of the office.
Register by March 3 and save $425! Join us in Chicago, IL – April 24-26, 2017.
In many companies, new employees sign key documents and policies—including arbitration agreements—with the use of electronic signatures. There has been a growing trend in litigation brought by former employees to challenge these signatures as inauthentic in response to employers’ motions to compel arbitration of the employees’ lawsuits. These challenges are based on employees’ claims that they either did not sign the agreement or that they can’t remember ever having seen the agreement and, if they had, that they would never have signed it. Many judges have been taking these challenges seriously and requiring employers to respond through extensive briefing and evidentiary hearings to authenticate the employee signatures.
On April 22, 2016, the California Court of Appeal for the Second Appellate District issued a ruling on the enforceability of electronic signatures in arbitration agreements. In
Espejo v. Southern California Permanente Medical Group (B262717), the court provided much-needed clarity on what an employer must show in order to authenticate an electronic signature on an arbitration agreement. This article analyzes
Espejo and seeks to identify what employers can do to avoid the legal pitfalls associated with electronic signatures.
In 2011, plaintiff Jay Espejo electronically signed various documents as part of his offer to work as an associate physician at defendant Southern California Permanente Medical Group (SCPMG). One of the documents electronically signed by Espejo was a dispute resolution procedure, requiring the parties to arbitrate any dispute that would otherwise be cognizable in a court of law.
In 2014, Espejo sued SCPMG and the corporate entity that owned and operated the medical centers and hospitals through which SCPMG provided medical services for wrongful termination and whistle-blower retaliation. SCPMG filed a petition to compel arbitration. Espejo opposed the petition, contending that defendants failed to properly authenticate his signature on their arbitration agreement. In support of its petition, SCPMG filed a declaration from an SCPMG systems consultant providing details regarding the electronic review and signature process for SCPMG’s employment agreements.
The trial court denied the defendants’ petition, finding that SCPMG failed to provide evidence to authenticate the signature on the arbitration agreement and therefore failed to meet its burden of showing that an agreement to arbitrate the lawsuit existed. The California Court of Appeal heard the case and reversed the decision of the trial court.
Standard for Enforcing Electronic Signatures in California
Both federal and California law (the state Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act (E-SIGN)) provide that agreements may not be denied legal effect because they are in electronic form or have electronic signatures. California’s Uniform Electronic Transactions Act provides that “[a]n electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.”
Despite the express mandate of the California act, California courts have often applied what appears to be a heightened standard for enforcement of electronic signatures on written agreements. In one recent California case,
Ruiz v. Moss Brothers Auto Group, a California Court of Appeal upheld a trial court’s refusal to enforce an arbitration agreement based on questions regarding the authenticity of an electronic signature. The court held that the employer failed to submit sufficient evidence that the employee was the person who electronically signed the arbitration agreement in the face of the employee’s testimony that he did not recall signing the agreement and would not have signed the agreement if it had been presented to him. The employer’s declaration submitted in support of its petition to compel arbitration explained that each employee was required to log into the HR system with a unique username and password in order to review and electronically sign the agreement.
However, the court held that this was insufficient evidence to authenticate the signature. In particular, the court pointed out the following deficiencies in the employer’s declaration:
Espejo court relied on
Ruiz to determine that the employee’s electronic signature was, in fact, authentic because it offered “the critical factual connection that the declarations in
Ruiz lacked.” In reaching this conclusion, the court relied on the following specific facts:
Given this process for signing documents and protecting the privacy of the information with unique and private usernames and passwords, the systems consultant was able to conclude that the electronic signature was made by Espejo on the agreement at the date, time, and IP address listed on the documents. The court concluded that these details met the requirements articulated in
Ruiz and established that the electronic signature on the agreement was “the act of” Espejo.
Espejo decision sets forth how it is possible for employers to successfully use and defend an online orientation platform. It provides employers with important information on how they can minimize risk by implementing the following safeguards:
More information on compliance with the federal Electronic Signatures in Global and National Commerce Act (E-SIGN) and California’s Uniform Electronic Transactions Act requirements discussed above is included in the firm’s
O-D Comply: E-Signatures materials.
Robert (“Bob”) A. Jones is the former California State deputy secretary, special counsel for the Labor and Workforce Development Agency, (California Department of Labor) and is an attorney with Ogletree Deakins in San Francisco. Rachel J. Moroski is an attorney with Ogletree Deakins in San Francisco. © 2016 Ogletree Deakins. All Rights Reserved. Reposted with permission.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Join SHRM's exclusive peer-to-peer social network
SHRM’s HR Vendor Directory contains over 3,200 companies