Quirky Question #268: E-Sign Away!

Question: We have our electronic handbook and arbitration agreement online, and all employees sign both electronically.  I saw a news blurb that a California court last year refused to enforce an arbitration agreement that was electronically signed.  Can’t we use electronic signatures in California?

Answer: By Gabrielle Wirth

Gabrielle Wirth

Do not fret – yes, you can use electronic signatures in California!  The case you read about is Ruiz v. Moss Bros., 2014 WL 7335221 (Cal. Ct. App. Dec. 23, 2014), but it is not bad news for employers who wish to provide policies or other documents online.  The court did not hold electronic signatures invalid.

The case involved the employer’s attempt to move into arbitration a class action alleging claims of off-the-clock overtime and violation of California’s meal and rest break requirements.  The employer had its employees electronically sign its arbitration agreements.  Unfortunately, however, the employer failed to provide evidence “whether[,] or if so[,] how Moss Bros. ascertained that Ruiz electronically signed, or was the person who electronically signed,” the arbitration agreement.  Because of this failure, the court denied the petition to compel arbitration on the grounds that the employer “failed to establish that the Arbitration Agreement in fact exists between Moss Bros. and Ruiz.”

It is unclear from the case if the employer could prove how its electronic signature system works.  At issue, though, was a factual and not a legal question.  From a legal standpoint, Cal. Civ. Code § 1633.7 provides that an electronic signature has the same legal effect as a handwritten signature.  The factual question was whether there was enough evidence that “the electronic signature on the 2011 Agreement was the act of Ruiz,” and the court decided that here, there was not.

While not holding electronic signatures invalid, this case does raise the important reminder that employers need to review the mechanics of their electronic signature program (1) to make sure that the system accurately reflects dates and times, (2) to ensure that only the employee would have access to his or her own electronic signature, and (3) to be prepared to provide evidence of these facts.  It would also be helpful to have employees periodically certify that they have not given their passwords to anyone else.

Please feel free to reach out to us for more guidance on this issue.