The U.S. Court of Appeals for the Second Circuit recently issued a ruling on the validity of e-signatures, which offers valuable pointers for all employers who use e-signatures as part of their employee onboarding process and other employment documentation.
In Barrows v. Brinker Rest. Corp., the employer attempted to dismiss and compel an employee to arbitrate employment law claims raised in a federal lawsuit filed on behalf of herself and similarly situated employees. In support, the employer submitted arbitration agreements bearing the plaintiff’s electronic signature. The computer at which the agreements were signed had an IP address registered in the employer’s name, and the plaintiff’s timesheets showed that she was working at the restaurant on the day that the agreements were signed. The employer used the “Taleo” software platform for onboarding – a platform which requires an employee to create a unique individual password upon initial login. A manager for the employer testified that all employees went through the same onboarding process, and that if a manager created a unique password for another employee without authorization, doing so would result in termination of employment.
The Plaintiff indicated that she had never created a username and password for the Taleo system; completed all her onboarding paperwork by hand; never completed any electronic paperwork for the employer; had never used any computer at an employer facility; had never seen or signed an arbitration agreement; and had never received or signed any document showing receipt of the employer’s policies and procedures.
The trial court granted the employer’s motion to dismiss, but the Second Circuit disagreed, concluding that the plaintiff had created a triable issue as to whether she had signed the arbitration agreement. The Second Circuit found evidence in the record that supported some of the plaintiff’s statements, including the following:
- Creation of a unique individual password in the Taleo platform only required submission of standard employee information that was already in the employer’s possession.
- The fact that the IP address on the onboarding documents reflected a computer located at the restaurant where the Plaintiff worked might support an inference that the signature was authentic, but might also support an inference that an agent of the employer completed the arbitration agreement.
- Another plaintiff in the lawsuit had hand-signed his arbitration agreement on the same day that the Plaintiff had allegedly electronically signed hers. The language in both agreements also differed substantially, with the other plaintiff’s agreement differing in scope of covered disputes, among other things. This evidence cast doubt on the employer’s assertion that all employees executed their onboarding paperwork electronically.
The Second Circuit’s ruling in the Barrows case highlights that organizations should not be cavalier about electronic signature practices. If e-signatures are used, they should be used consistently. If an issue prevents the use of e-signatures in some instances, the reason for the deviation from policy should be documented. An employer may also want to consider an additional authentication process – such as two-factor authentication – to add an additional measure of reliability to e-signatures (and improve the security of its computer information systems in the process).
If you have any questions about e-signature requirements, or about your employee onboarding process in general, please call our office. Thank you.
This Client Alert provides a general overview of new legal developments. It is not intended to provide legal advice. If you have questions or would like more information about how these developments may affect your business, please contact us at (570) 341-8800.