E-Sign Act and UETA Requirements

In the United States, there are two statutes designed to validate electronic signatures: the federal Electronic Signatures in Global and National Commerce Act (E-Sign Act); and the Uniform Electronic Transaction Act (UETA).  The UETA governs electronic signatures at the state level which Hawaii adopted. Both the E-Sign Act and UETA provide the following requirements for an e-signature to be valid:

• Intent to sign:  E-signatures are only valid if the parties agree to sign.
• Consent to do business electronically: The parties acknowledge that they agree to do business electronically, either explicitly or implicitly.
• Association of signature with the record:  E-signatures must leave a mark (either graphical or textual) on the document that can be associated with the record.
• Record retention:  The parties must be able to access and save the signed document.

Both the E-Sign Act and UETA confirm that electronic signature, electronic contract, or electronic record shall not be denied legal effect or enforceability solely because it is in electronic form. To the extent that a document requires notarization, the State of Hawaii allows notaries public located in Hawaii to provide services to signers in any location, including online notarizations, effective January 1, 2021.

However, certain types of records and documents are not covered by the E-Sign Act or UETA. Some examples of excluded documents are court orders, notices and official court documents; notices of termination of utility services; cancellation of insurance benefits; and documents accompanying the transportation of hazardous materials.

As employment related documents (e.g., Forms I-9 and W-4) as a category are not specifically excluded by the E-Sign Act and UETA, they are presumably covered by them. Nevertheless, the employer should confirm with any interested third party (e.g., your insurance company or the government agency issuing the subject document) that any specific employment related document intended to be electronically signed and recorded will be acceptable to them.

Measures Employers Should Consider if Using Electronic Signature

Although pen-and-ink signatures are still acceptable, employers can take proactive measures to improve the chances that electronic signatures will be enforced in the event of litigation. First, employees should separately agree to receive and sign documents electronically. Second, before providing access to the documents electronically, employers may require the employee to access the system using a unique username and password that the employee creates and only the employee knows, and to change the default password assigned by the system. The electronically signed documents should contain information that attributes the signature to the particular employee, such as a date and time stamp, the IP address and other record of the system proving the particular employee had logged in.

Employers should retain the electronic records of the employee’s “sign up” for the electronic records. The sign-up process should include the employee’s ability to print the documents, and copies should be sent to the employee’s personal and, if applicable, business email accounts. Copies of those emails should be stored in case it is necessary to prove the employee signed up.

Finally, in the event the signature is challenged, employers must ensure there is an employee or vendor who will be able to demonstrate under oath the steps taken to ensure that the signature on the document is indeed the employee, and that the employee agreed to proceed with the transaction electronically.

Should an employer decide to use an e-signature vendor, they should consider the vendor’s capabilities and confirm that the subject document(s) will be executed per the E-Sign Act and UETA.