Thank you, Texas Supreme Court, From the Bottom of Our Electronic Hearts
By Amanda Thompson, J.D., senior vice president, PartnerSource
If you’ve discussed key opinions with anyone seeking to uphold arbitration in Texas in recent years, you’ve likely heard the word "Kmart" followed by a guttural groan. That same groan grew louder with the word "Aerotek." The facts of those cases were essentially the same. Defendant Employer seeks to compel arbitration in the trial court. Plaintiff Employee objects to arbitration and signs a sworn affidavit claiming he never saw, reviewed or signed the electronic arbitration agreement. Employer shows up to evidentiary hearing with electronic records demonstrating that a person with identification unique to the employee indeed signed the electronic arbitration agreement. Trial court "weighs" the evidence, sides with the employee, and denies the motion to compel arbitration. Appellate court rubber stamps the decision, finding that the trial court did not abuse its discretion when resolving fact issue in favor of employee.
Thanks to the Texas Supreme Court, we are no longer groaning. In a recent decision favorable to employers that utilize electronic arbitration agreements (and, really, to all businesses that conduct electronic transactions in Texas), the Texas Supreme Court reversed the Dallas Court of Appeals decision in Aerotek. Instead of analyzing the decision as a mere fact issue that the trial court could resolve in favor of either party, the majority relied on the framework within the Texas Uniform Electronic Transactions Act. The court specifically discussed the efficacy of the security procedures under Section 322.009(a), which provides the link between the electronic record and the person to whom the record is attributed. The court held that the evidence from Aerotek conclusively established that the electronic signatures on the arbitration agreements were from the very employees who claimed they did not see or review the agreements. The impact of this decision cannot be overstated, and the court unquestionably got this one right.
Below are a few best practices to incorporate into your Texas Option programs (if you haven’t already) following PartnerSource’s review of the detailed (and lengthy) opinion in Aerotek:
· Retain the records reflecting that an employee agreed to arbitration through electronic means. The record should contain information unique to the employee—such as an employee identification number and employee-generated password. The preserved record should also include a timestamp depicting the time and date the employee agreed to arbitration.
· Be prepared to explain the online process to the factfinder (either through affidavit or testimony). The employer should be able to explain how employees are assigned unique identifying information, how they create passwords, how they access the system, and how they electronically acknowledge the arbitration agreement. Although describing this information may be tedious, it is imperative that the explanation is thorough, concise and easily understood by a factfinder (who may not be "tech savvy"). At the evidentiary hearing on the motion to compel arbitration, an Aerotek program manager performed an in-court demonstration on a laptop and monitor to identify how each step in the hiring application process worked. Although this evidence need not come from a top IT expert or computer programmer, the court appreciated that the testimony came from the manager who was involved in the application development and who had overseen its use thousands of times.
· The employee should not be able to bypass the arbitration acknowledgement. Without electronically signing or checking a box consenting to arbitration, the employee should not, under any circumstance, be able to advance to the next page, complete the application or conclude the training. The court did not indicate how the signature must appear, but since the court noted that electronic signatures sometimes involve nothing more than checking a box, we do not believe a typewritten name is necessary. The big takeaway here is that there must be no way that the employee could have completed the task unless he consented to arbitration. Only then would the electronic record identify that the employee had completed the process.
· Maintain a single, secure system for tracking the employee’s online activities. Employers should be able to explain the company’s procedures that are in place to prevent unauthorized access. Detailed records of glitches or outages would also be helpful to give the court confidence in the security. If testimony is necessary, the employer should assure the court that the only person who could have completed the electronic arbitration acknowledgement is the employee.
· Ensure the proof cannot be altered. The electronic form or acknowledgement submitted by the employee (or the stored document reflecting that the employee completed the task wherein he agreed to arbitration) must be kept in its original form, and the employer should not be able to manually create or modify any of the information contained within the form in any way. So that no person can modify it, it is best if the form is auto-generated.
· Require the employee to acknowledge arbitration routinely. Although this was not discussed in the opinion, we believe it is important that the employee review and agree to arbitration on a routine basis—perhaps annually, if feasible. Preserving the records reflecting that an employee agreed to arbitration multiple times over multiple years strengthens the employer’s position that the specific employee was the one who agreed to arbitration and weakens any claim by the employee that he did not see or review the arbitration agreement.
This decision makes it much more difficult for a plaintiff to successfully challenge the arbitration provision contained in Texas Option program documents. However, the majority in Aerotek did caution that an opposing party may always offer evidence that security procedures lack integrity which could destroy the credibility of the evidence before the court, so contact your PartnerSource team leader today to incorporate these best practices into your Texas Option programs!