Will a Click Stick? The Texas Supreme Court Weighs in on the Enforceability of Electronic Signatures on Arbitration Agreements

Last Friday, the Texas Supreme Court, in Aerotek, Inc. v. Boyd et al., No. 20-0290 (Tex. May 28, 2021), reversed the Dallas Court of Appeals and found that an employer conclusively established that four employees signed and therefore consented to arbitration agreements using the employer’s computerized hiring application that required the employees’ digital signatures.

Like many employers, Aerotek uses a computerized hiring application for onboarding.  The system automatically sends a welcome email to the successful candidate with a hyperlink to navigate to the hiring application’s online account registration page.  Once there, the candidate creates a unique user ID and password and selects security questions.  To later log in to the hiring application, the candidate must enter this user ID, password, and security-question combination correctly.  Aerotek’s witness testified that the steps could not be skipped to reach the end of the process, and that Aerotek could not alter forms after they were submitted. 

Here, the employees completed the onboarding process, which required the use of their digital signatures in several instances, including on an arbitration agreement.  The employees later claimed race discrimination and retaliation, filed suit, and were met with Aerotek’s motion to compel arbitration. 

The employees submitted affidavits claiming they did not see or sign the arbitration agreements despite the fact that Aerotek produced evidence including each employee’s timestamped, electronic signature and the security procedures related to the application.  The trial court denied Aerotek’s motion to compel arbitration and the Dallas Court of Appeals affirmed.

Reversing, the Court, after reviewing the Texas Uniform Electronic Transactions Act, determined that Aerotek’s evidence showing the security procedures its hiring application used to verify that a candidate electronically signed the arbitration agreement was “uncontroverted.”  According to the majority, once Aerotek proved its security procedures, which it did, the burden shifted to the employees to demonstrate how their electronic signatures could have wound up on the arbitration agreements, considering that “mere denials do not suffice.”

The Court further noted that the employees were free to seek discovery to attack the reliability of the hiring application’s security procedures, but chose not to do so.  In short, an employee’s mere denial of his electronic signature on a document, in the face of evidence establishing the efficacy of the employer’s security procedures used in generating the agreement, will not suffice.

This case is important because it establishes a clear burden of proof for an employer seeking to enforce a digitally signed employment-related agreement when the employee disavows the signature.