July 2021 Business Litigation Update

Decision Strengthens Companies’ Ability to Enforce On-Boarding E-Signatures

A recent decision by the Texas Supreme Court just made it easier for companies to rely on electronic signatures and digital contracts in enforcing arbitration agreements against their employees.

In Aerotek, Inc. v. Boyd, four Aerotek employees filed a lawsuit against the company alleging discrimination and retaliation.  Aerotek moved to compel arbitration based on an agreement the company said the employees all signed as part of their “digital on-boarding process.”  The process included electronic signatures by the employees on the digital arbitration agreement, as well as on an Electronic Disclosure Agreement stating that the employees were bound by the electronic hiring documents as if they were signing paper documents.

The employees all agreed they singed the Electronic Disclosure Agreement, but they denied signing the arbitration agreement.  Aerotek, however, was able to show the employees’ electronic signatures on both digital documents.

And, more importantly, Aerotek proved it had reasonable security measures in place that would prevent the digital documents from being altered after they were submitted.

In the face of this evidence, the burden of proof fell to the employees to rebut the e-signatures – which they failed to do by simply denying signing the documents.

The Texas Supreme Court’s ruling highlights that, in Texas, digital contracts and e-signatures can be as enforceable and binding as paper documents; however, companies must be able to prove that those digital documents are secure and cannot be altered.

The bottom line: If your business uses digital document execution, it is critical to have the necessary security measures in place to protect against tampering.  And, to be able to prove those measures are in place — if litigation ensues over an e-signature.