Many (wise) California employers use arbitration agreements requiring employees to submit any future employment-related dispute to mandatory arbitration. Arbitration is typically favored by employers because it is cheaper, faster, and more private than litigation. There’s also the perception that arbitrators are more conservative and less emotional than jurors, which employers believe translates into more friendly decisions (and smaller damages awards).
Enforcing the Signed Arbitration Agreement
Getting the employee to sign the arbitration agreement is just the first step. The next step – and the most critical step – is getting a Court to enforce that arbitration agreement when the employee ignores it and sues the employer in Court anyway. In this situation, the employer has to bring a motion before the Court and show the Court that the employee previously signed an agreement that prevented the employee from suing in Court – and agreeing to go to arbitration instead.
The Court then studies the arbitration agreement carefully to make sure that the employee did, in fact, sign the agreement and agree to arbitration. A key question for the Court to decide is whether the employee’s signature on the arbitration agreement is “authentic” – that is, that the scribble on the document’s signature line is, in fact, the employee’s true signature.
Employers go to all this trouble – and expense – to try to enforce their arbitration agreements because they firmly believe that arbitration provides them a fairer process compared to litigation.
Well…a recent California Court just made it even harder for employers to enforce their arbitration agreements.
Beware e-Signed Arbitration Agreements
In Iyere v. Wise Auto Group, two employees who had both e-signed mandatory arbitration agreements sued their employer in Court alleging discrimination, harassment, and retaliation. The employer brought a motion to the Court to dismiss the Court action and, instead, order the dispute to arbitration. The employees opposed the employer’s motion by arguing that they “did not recall” signing the arbitration agreement and that they “did not know” how that their signature was placed on the arbitration agreement.
The Court held that, in the case of e-signed agreements, an employee’s claim not to recall signing the agreement serves as evidence that the e-signature was not made by the employee. This is different than a handwritten signature, the Court reasoned, because it is reasonable to expect someone to recognize their own signature. It’s not reasonable to expect someone to recognize a “computer printout,” the Court reasoned. As a result, the Court concluded, “Authenticating an electronic signature if challenged can be quite daunting.”
Although the Court found other evidence sufficient to authenticate the employees’ signatures and, thus, to grant the employer’s motion to move the dispute to arbitration, the Iyere decision highlights an important lesson for employers: have employee sign your agreements with a handwritten signature.
You can read the Court’s opinion in Iyere v. Wise Auto Group here.