What Does the E-Sign Act Mean for Web-based Forms in HR?

by Carole Lassak on August 7, 2013 · 0 comments

Grocery stores and retailers introduced electronic signatures at checkout lines in the late 90s. Then, businesses and organizations began accepting digital signatures over the web through web-based document services. Within the last decade, HR has joined the fight against ink and paper, too.
We call it the Signature Revolution.

It all started in the 80s when businesses began to adopt fax machine technology to transmit the sensitive delivery of paper-based documents. While the impact on speed of communication was significant, many forget the hurdles that had to be resolved around this new way to transmit an electronically submitted signed document. The path of these documents was not traceable or controllable, as they traveled thousands of miles before reaching their destination. If no one witnessed the signature being created, could businesses, governments and organizations trust their validity? Despite the concerns, the courts approved the method and the fax machine becomes a standard tool in offices around the world.

Fast forward to 2000 when President Clinton signed the Electronic Signatures in Global and National Commerce Act (ESIGN). Establishing the validity of electronic signatures for interstate and international commerce, this Act reinforced a lot of similar laws and guidance being passed at the state level. It further helped pave the way for new ways to transmit signatures digitally.

It’s important to realize that laws like the E-Sign Act provide for the legality of the electronic signature, and not the specific method or technology. Congress and the law left it open when determining the method or technology as an electronic signature capturing system.

For example, the first section (101.a) of the E-Sign Act states that a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” Basically, this says that electronic signatures and records have the same legal standing as their paper equivalents. Further, electronic records and paper documents are subject to the same legal scrutiny.

The E-Sign Act also permits the retention of an electronic record of a transaction to satisfy legal retention requirements, provided the electronic record “accurately reflects” the substance of the contract and is “accessible” to people who are entitled to access it “in a form that is capable of being accurately reproduced for later reference, whether by transmission, printing or otherwise.”

What qualifies as an electronic signature is defined in the Uniform Electronic Transactions Act (UETA) released in 1999. An electronic signature (e-signature) is any electronic means that indicates that a person adopts the contents of an electronic document or message. United States law defines e-signature as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”

While the E-Sign Act is extremely comprehensive, there are certain types of documents that are not covered by the Act:

Wills, codicils, and trusts
Adoption paperwork
Divorce decrees
Certain areas of the Uniform Commercial Code
Court orders and notices
Official court documents, including briefs and pleadings
Notices of the termination of utility services
Notices of default, foreclosure, repossession, or eviction
The cancellation of insurance benefits
Product recalls or notices of material failures
Documentation accompanying the transportation of hazardous materials

With respect to employee-related documents, electronic signatures enable employers to be as paperless as possible, greatly reducing the costs and errors that result from paper-based systems. Through unique user names, passwords, and encryption technologies, HR has become confident that the e-signatures they gather are as legal, valid and enforceable as pen-and-paper signatures. Solutions such as Sage HRMS HR Actions, give HR professionals the ability to incorporate e-signatures in their web-based form workflow. This allows employees or managers to sign documents like handbook acknowledgements, pay increase change forms, performance reviews over the web.

We’re curious. What does your HR department or organization think about the Signature Revolution?