When an employee is hired, they are required to sign and acknowledge their understanding of, and agreement to, a number of important policies that become a part of the employment relationship. This often includes an arbitration agreement and waiver of class actions. The review and execution of these agreements is treated by some as a perfunctory exercise, but these agreements affect the substantive rights of the employer and employee and must be handled with the importance they deserve.
The Need for Proper Documentation
It is not enough to have a copy of handbooks, policies, and most importantly the arbitration agreement in the employee file. An employer must be prepared to show any acknowledgement and agreements that are fully executed and that signatures can be authenticated. California employers face a hostile environment and employees can be expected to conveniently forget what they have signed or that they have signed documents electronically. For handwritten, “wet ink,” signatures, employers can turn to other signed documents to show that the signature is authentic. However, that is not available for documents using e-signatures, such as through DocuSign or Adobe Sign.
Proving the Authenticity of Electronic Signatures
For example, when moving to compel arbitration based upon an electronically signed arbitration agreement, the employer must be prepared to show the electronic signature is authentic. California Civil Code section 1633.9 addresses how to prove a document was electronically signed by the employee:
(a) An 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.
But, what does this mean? It is not enough for the employer to say, “the employee signed this on [date].” The employer must be prepared to show it was the act of the employee to sign it electronically, such as by showing the signature could only have been placed on the document using the employee’s unique computer login ID and password, that the electronic signature indicated the date and time the electronic signature was made, and that it was the employer’s practice to require the employee to login using their unique login ID and password to complete the onboarding forms and arbitration agreement. Retention of the DocuSign or Adobe Sign certificate of authenticity verifying the identity of the signer is an important element of proof.
Consider Who Must Sign the Agreement
It is also important to consider who must sign the agreement. It may be sufficient to have only a signature block for the employee to sign and indicate their understanding and agreement if the agreement is appropriately drafted. But, if there are signature blocks for both the employer and employee, or the language of the agreement provides that both must sign to be effective, it is important that both sign. California courts have acknowledged that arbitration agreements bearing only the employee’s signature can be valid and enforceable, but that may turn on the language of the agreement itself.
In Pich v. Laseraway, LLC, the court refused to enforce an arbitration agreement containing only a signature block for the employee based upon language suggesting each party needed to sign to indicate agreement. While agreements signed by only the party against whom the agreement is being enforced are routinely upheld in a variety of contexts, hostility to employment arbitration agreements is endemic in California and courts will go to extremes to refuse enforcement. In Pich, the court reasoned that the plain text of the arbitration agreement required both the employer and employee to sign, even though there was no signature block for the employer and all other indicia of the employer’s intent to be bound were present, such as the agreement being presented electronically for the employee’s signature at the time of hire, through the portal bearing the employer’s name, on the employer’s letterhead, and the employer filed a motion to compel arbitration.
The arbitration agreement stated “The Company and I understand and agree that, by signing this Agreement, we are expressly waiving any and all rights to a trial before a judge and/or a jury,” “[t]he parties acknowledge and agree that each has read this agreement carefully and understand that by signing it, each is waiving all rights to a trial or hearing before a judge or jury of any and all disputes and claims subject to arbitration under this agreement.” The court held that this language unambiguously required both parties to sign and as the employer did not sign, “the parties never formed an agreement to arbitrate,” notwithstanding the lack of a signature block for the employer and the other facts indicating agreement.
This decision runs contrary to established cases holding that if there are indicia that both parties intended to be bound, such as the non-signing party having prepared the agreement, presenting it on company letterhead, and taking other steps to enforce the agreement, and thus may be an outlier.
Thankfully, the Pich opinion is unpublished and thus does not have precedential value and cannot be cited as authoritative by other courts. However, it is indicative of California’s pervasive hostility to employers and arbitration agreements. It is important that California employers carefully draft their employment documents, ensure all signature blocks are completed, and that signatures can be authenticated.
