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Tips to Safeguard the Practice of Obtaining Electronic Signatures from Employees

September 27, 2017

To meet the fast-paced demands of geographically diverse or mobile workforces, or simply for convenience’s sake, many employers have begun electronically disseminating company policies and agreements.  However, these employers may find themselves wondering if and when obtaining an employee’s electronic signature – as opposed to a “wet ink” signature – is sufficient, and rightly so.

South Carolina has enacted the Uniform Electronic Transactions Act, which expressly allows an electronic signature to be used to execute an agreement or contract.  See S.C. Code Ann. §§ 26-6-10 to 26-6-210.  A risk associated with using electronic signatures is that if the company must later enforce an agreement against an employee, the employee could potentially deny ever signing the agreement or claim that another individual entered the electronic signature without authority to do so. 

In such a case, the electronic signature must be “authenticated” to hold up in court.  While the evidentiary process of authentication is a topic for another day, there are certain precautions an employer should take if it wishes to have employees electronically sign agreements (e.g., employment agreements or restrictive covenants agreements) to help ensure that any given electronic signature is attributable to a particular employee.

Under South Carolina law, an employer best protects itself if it has some sort of security procedure in place to authenticate an employee’s electronic signature. 

That being said, employers relying on employees’ electronic signatures should consider the following best practices:

  • Require the employee to enter personal information to access the agreement. This could include entering the last four digits of his or her Social Security number, an employee identification number, or a confidential password.
  • Require the employee to take some specific action to either “sign” or “execute”[1] the agreement. This could include typing in his/her name; clicking an icon; typing in a pin, password, or the last four digits of his/her Social Security number; or a combination of these options.
  • Record the date and time that the employee entered his/her electronic signature.

Electronic signatures deliver a number of advantages, not the least of which is convenience. But, as noted above, they do present some unique challenges that employers should consider when implementing personnel policies.

[1] Note that a federal court in South Carolina recently found a distinction between an employee “acknowledging” and “signing” an agreement, and did not find it acceptable that the employee created an electronic signature by clicking an icon which read “Acknowledge.”  See Gordon v. TBC Retail Group, Inc., No. 2:14-cv-03365-DCN, 2016 WL 4247738 (D.S.C. Aug. 11, 2016).

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