Texas Employers Given Clear Protections for Electronic Signatures in Onboarding

Electronic onboarding of employees eases an extensive and document intensive process for employers. It can also cause many issues, the biggest when employees argue about whether they are bound to the electronic contracts they sign.

The Texas Supreme Court (SCOTX) recently announced how employers can ensure enforceability and protection of their online employment contracts and other onboarding documents. Following this path will allow Texas employers to ensure they are protected and unrestricted when electronically onboarding new employees.

Before SCOTX’s recent ruling in the case of Aerotek, Inc. v. Boyd, employers who required employees to sign employment agreements and other onboarding documents electronically sometimes had difficulty enforcing the agreements. Difficulty occurred when employees claimed they did not agree to the documents and/or denied the electronic signature on record was their own. Employees often were able to overcome enforcement of their employment agreement, unless employers could establish the employee actually signed and agreed to the document.Here, SCOTX opened the door for employers to establish agreement as a matter of law and limit employees’ abilities to deny they signed the documents.

SCOTX looked to the Texas Uniform Electronics Transactions Act (“the Act”) and determined that when an employer has decided to conduct onboarding electronically, the Act provides a standard for attributing electronic signatures to the employee. Section 322.009(a) of the Act provides that an electronic signature is attributable to a person if you can determine that it was theperson’s actions. The person’s actions may be shown to connect to an electronic signatureif “security procedures” were used.

Security procedure is defined asany “procedure employed for the purpose of verifying that an electronic signature, record, or performance is that of a specific person or for detecting changes or errors in the information in an electronic record,” including “the use of algorithms or other codes, identifying words or numbers, encryption, or callback or other acknowledgment procedures.” Therefore, security procedures may include the following:

• Requiring personal identifying information, such as a social security number or an address, to register for an account;

• Assigning a unique identifier to a user and then tying that identifier to the user’s actions;

• Maintaining a single, secure system for tracking user activities that prevents unauthorized access to electronic records;

• Business rules that require users to complete all steps in a program before moving on or completing the process; and

• Timestamps showing when users completed certain actions.

Although these examples are not exclusive under the Act, effective security procedures provide connection between the electronic record stored in a database and the person to whom the record is attributed. A record that cannot be created or changed without unique, secret credentials can be attributed to the one person who holds those credentials, i.e., the employee.

SCOTX’s ruling rests upon the concept of modern dependency upon electronic signatures. Proof of effective security procedures used in generating a contract can confirm that an electronic signature is attributable to a signatory. Using this roadmap, Texas employers can streamline employee onboarding processes to avoid factual issues of assent.

All employers can effectively onboard employees electronically with little worry regarding the legal liability if they incorporate these procedures. If you are an employer, consulting an employment lawyer can help your business ensure your electronic onboarding processes comply with current Texas law.

Originally published in Citybiz.