Our Focus. Your Results. 317-445-4163

The Business Use of E-Signatures in Light of the Pandemic

This past year, many employers were left scrambling to keep their companies functioning in the midst of pandemic-related federal, state and local laws and guidelines. Those companies that already had a foundation of technology-related processes found it easier to implement remote work policies and procedures. After all, with the technology in today’s society, remote communication tools, chatbots, and virtual reality abound, and many employee tasks may be completed remotely.

One of the technological advances in recent years that has greatly benefited the remote workforce during the pandemic is the secure use of electronic or digital signatures (e-signatures) instead of “wet” or in-person handwritten signatures. Even though e-signatures were vital for business continuity in many companies’ pre-pandemic, social distancing and remote work guidelines have fast-tracked the need for e-signatures in many private organizations. This is true for governmental agencies as well. While certain governmental agencies such as the Occupational Safety and Health Administration (OSHA) have allowed e-signatures in the pre-COVID era, others have also adjusted their policies at least temporarily. The Internal Revenue Service (IRS), which has accepted e-signatures on certain forms through the pandemic has now extended this allowance until June 30, 2021. The United States Citizenship and Immigration Services (USCIS) allows employers to create their own electronic Form I-9 as long as they follow the required guidelines. Even the Department of Labor, under the Summary of 29 Code of Federal Regulations 29 C.F.R. Part 18 Regulations on Electronic Signatures, has determined that, due to the difficulty in obtaining “wet” handwritten signatures, administrative law judges may accept e-signatures on certain documents.

Federal Laws Applicable to E-Signatures

Due to the risks and security needs, the requirements for utilizing electronic or digital signature (e-signature) formats may vary, dependent on the purpose of the e-signature and applicable federal, state, and local laws.

The Uniform Electronic Transactions Act (UETA) of 1999 has been adopted by almost all states, with the exception of Illinois and New York, which have their own laws related to e-signatures. This Act was intended to provide general uniformity to the state laws for records retention and e-signatures and allowed for legal enforcement of the validity of e-signatures with the flexibility for states to make adapt the requirements.

Because of the variances in state laws regarding UETA, the Electronic Signatures in Global and National Commerce Act (ESIGN Act) was enacted in 2000 to provide guidelines for interstate and foreign commerce, that go beyond UETA and individual state laws for e-signatures. According to the Wikipedia, “…. a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” It further states, “The term ‘electronic signature’ means 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.” (https://www.govinfo.gov/content/pkg/PLAW-106publ229/html/PLAW-106publ229.htm). This Act legalizes e-signatures, which allows them to be considered as evidence in court proceedings.

Besides the UETA, the variances in state laws for UETA, and the ESIGN Act, there are also a number of courts that have weighed in on the legalities of e-signatures.  This suggests that employers should not only stay up-to-date on federal, state, and local laws regarding e-signatures but that they should not be oblivious to developing case laws as they relate to the UETA in their particular state.

Business Usage of E-Signatures

There are several methods that companies may utilize for e-signatures. The original method was to usea “wet” or in-person handwritten signature, followed by scanning or taking a photo of that document to create an electronic record of the document. This method poses security concerns for maintaining the integrity of a document. Therefore, employers who opt to use this method should retain the original document in case proof of the signature is ever needed.

For more advanced security, organizations may use digital signatures through a software program or through a third-party vendor. Either may provide authentication methods to verify the signatory. Certificate digital identifications (IDs) provide a further layer of protection by authenticating the identity of the signatory using data encryption with public and private keys that encodes and decodes the data.Whatever system is used, for an e-signature to be legally binding, there must be:an implied consent for utilizing electronic business format;

  • an intent to sign as well as an opportunity to decline;
  • proof of the context and circumstances of the signature that would be demonstrable given an audit;
  • connection to the particular document that is signed; and
  • validity of records that is reproducible, as needed. 

Recommendations for Employers

While e-signatures may be efficient, raise productivity levels, streamline processes, and provide both time and cost savings in the workplace, setting up an e-signature system without careful consideration could compromise the integrity of the process, depending on the document management system, teleworking capabilities, and the capabilities of employees, customers, and/or vendors. Employers who are setting up or changing e-signature systems should consider the following steps to ensure both validity and enforceability in the process and documents.

  • Develop an e-signature policy in coordination with experts in technology and security to eliminate risks in the process of signing, encrypting, transmitting, printing, and storing documents.
  • Determine what any acceptable exceptions to the policy would be.
  • Review current records retention policies and adjust as needed to ensure there are no conflicts.
  • Determine which documents would need to be signed and which documents would not be signed.
  • Ensure consistent procedures, such as obtaining consent by all employees, assigning each employee a unique username and password, and requiring specific electronic steps in signing a document, in order to leave a trackable footprint each time an e-signature is completed.
  • Communicate the new policy’s intended use, e.g. what documents can be signed electronically, and then train employees in the processes. This is a good time for employers to clearly define the authority each employee has in signing documents.
  • Ensure that applicants and employees who are working remotely have accessibility to the Internet as well as a computer or mobile device in order to complete an e-signature.
  • Confirm that the e-signature policy and procedures are used in compliance with federal, state, and local discrimination laws. If an employee needs a reasonable accommodation under the Americans with Disabilities Act and Its Amendments Act (ADAAA), “wet” or handwritten signatures or other approaches may need to be considered.
  • Stay up-to-date on the federal, state, and local laws as well as case law regarding e-signatures.

In this technological age, many believe that e-signatures are more secure than “wet” or handwritten signatures. Noting the ease and security of e-signatures, and recognizing the likelihood that remote work for employees and remote engagement with customers may become a new “norm” and a long-term strategy for employers, it appears that e-signatures will become even more popular in the upcoming years.

For additional information on using e-signatures in the workplace, please contact us at www.newfocushr.com.

Written by:  Kathi Walker, SHRM-SCP, PHR

                      Sr. HR Consultant





New Focus HR is a human resources consulting and training company that services all organizations. Our expert team collaborates with businesses to attract, motivate, retrain and retain their biggest assets, employees. While engaged with an organization, our focus is to find solutions that improve the company’s internal HR-related practices while increasing results at the same time! Our focus. Your results.