HR Meets E-Sign

By Michael King posted 11-14-2019 13:42

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QUESTION: CAN I MAKE OUR EMPLOYMENT AGREEMENTS ELECTRONIC?

ANSWER: YES, BUT YOU NEED TO PROVE THAT THE EMPLOYEE ACTUALLY AGREED TO THE ELECTRONIC TRANSACTION.

Can I sandwich an arbitration agreement in an electronic employment contract?

Jaime Odom worked for Which Wich Superior Sandwiches as a marketing manager. She had a beef with the sandwich shops. She sued claiming that she was sexually harassed at the job, retaliated against for complaining about the harassment, and not paid her full wages. Which Wich said Jaime had to arbitrate the dispute because she had electronically signed an arbitration agreement as part of the employment "onboarding process." CEFCO dba Which Wich Superior Sanwiches v. Odem, 2019 WL 4248465 (Fla.App. September, 2019). The Court said Jaime was not bound to the electronic arbitration agreement and could serve up her suit against Which Wich in court.

Travis Buckhalter worked for J.C. Penney as a loss prevention supervisor. Ironically, the loss presentation supervisor sued J.C. Penney for discriminating against him based on his race and religion. J.C. Penney said that Travis had to arbitrate the dispute because he had electronically signed the arbitration agreement. Buckhalter v. J.C. Penney Corporation Inc., 2012 WL 4468455 (U.S.Dist.Ct., S.D.Miss., September 25, 2012). The court told Travis he had to register his claims against the retailer at the arbitration counter.

How did J.C. Penney sell its electronic arbitration provision, while the court told Which Wich that it was out to lunch?

Electronic signatures are enforceable under the Uniform Electronic Transactions Act ("UETA") which states that "A signature may not be denied legal effect or enforceability solely because it is in electronic form." But Travis argued that the electronic signature was not his and that he had not electronically signed the arbitration agreement.

The check-out line at Penny.

J.C. Penney proved that the only way an employee could be hired was by using "J.C. Penney's online portal called the Associate Kiosk." The employee must electronically accept employment and complete electronic forms with his personal data. The employee is then assigned an employee ID number, "which uniquely identifies him during his employment with the company." The employee is then directed with his employee ID number to the "password kiosk where he creates a confidential password of his choosing which enables him to access the Associate Kiosk and other databases."

No one else at J.C. Penney has access to the password created by the employee, not even the system administrators. After creating the unique confidential password, the employee logs back into the Associate Kiosk and completes the various electronic forms, including the arbitration agreement.

The Store Manager said he saw Travis create his password at the Associate Kiosk (but did not see the password itself). He watched him electronically sign the agreements, including the arbitration agreement.

Travis had to arbitrate because J.C. Penney proved its elaborate procedures maintain the integrity of the electronic process and assure the authenticity of electronic consents.

Take it back to the kitchen. I didn’t order it!

Which Wich had similarly elaborate procedures, but failed to maintain the integrity of the employment process. The employment agreement did not contain a date or any specific reference to Jaime. She proved that she had never seen it, never signed it and never agreed to its terms.

Jaime proved that she previously knew the sandwich shop's manager and he offered her a job. She applied online and a few days later received a conditional job offer.

When Jaime arrived at work the manager "asked her for information such as her social security number, driver's license, voided check for direct deposit, and tax form and said he would 'take it from there,' and she 'was promptly then put to work.'"

Jaime proved that the manager told her that he had established a password and ID for her, which she never used.

Jaime swore under oath that she never used the login information and didn't have any knowledge of any on-boarding process. She said she did not authorize the manager to electronically sign anything for her and never agreed to the arbitration agreement. The Court said Jaime could sue the sandwich shop and did not need to arbitrate the claims.

Your electronic system must have procedures to maintain the integrity of the process!

J.C. Penney won because it proved that its process guaranteed that the employee created his own password and no one else could have electronically signed for the employee. Which Wich lost because its system allowed the manager to complete the forms for the employee, so it could not prove the electronic agreement of its employee.

If you wish to make sure that you have a valid system for electronic transactions, you should work with both the computer nerds and good lawyers.