Is Electronic Signature Legal in the Workplace?

Even the most tech-savvy workplaces are moving online and the handwritten signature is becoming more difficult to obtain. Electronic signatures increase efficiency as they don't require a physical presence or handoff. Simply click a button, or type your name and send it off by email.

Your company might be asked questions by clients or employees about electronic signatures. Are they legal? Are they secure? Secure?

Electronic signatures, also known as "e-signatures", are fast and secure. They are almost universally recognized for being a valid form of signature on most documents. Let's now look at the definitions of electronic signatures according to the major US legislative acts, as well as state exceptions and the recommended criteria for secure authentication.

E-signatures vs. Digital signatures

While the terms might appear the same and can be used interchangeably, eSignatures and digital Signatures are distinct. E-signature is any electronic document that confirms an individual's consent. The signer can be authenticated by a PIN or SMS code. Email confirmation may also be used. E-signatures can be considered as a broad category of signature methods that covers most US processes.

To authenticate the identity and signature of the signer, a digital signature uses a trust service provider's digital certificate. Once the signature has been signed, it is encrypted and bound to the document. Digital signatures are preferred by some states and are considered more secure. Digital signatures are a type of e-signature that uses specialized techniques to authenticate documents.

The ESIGN Act

E-signatures, including digital signatures, are generally valid in the United States thanks to the Electronic Signatures in Global and National Commerce Act or ESIGN. The ESIGN Act makes e-signatures legal admissible in courts and serves as satisfaction for any act that might require a signature.

The ESIGN Act can be used in the United States where federal law is applicable (we'll talk about what happens if federal law doesn't apply later). It does not apply in the case of wills, testaments or trusts, as well as birth/marriage/death certificates and codicils.

To be legally binding, e-signatures must comply with a few requirements set forth in the act

Intent

Signers must indicate their intent to sign electronically by either typing their name or clicking "accept" on a screen. All buttons and boxes should be clearly labeled.

Consent

Electronic commerce requires consent from signers. To allow users to continue, you must provide a short consent clause.

Opt-out clause

An opt-out clause should be included if a user is unable to provide an electronic signature. It should clearly outline the steps that the user should follow to manually sign the document.

Access to and storage of copies

Signers must be provided with a copy of signed documents. They should also have the ability to make copies if necessary.

UETA and State-Exempted Exceptions

The Uniform Electronic Transactions Act is the law that allows electronic signatures to be legalized in areas where federal law does not apply. This act is accepted in 48 US states, Puerto Rico, the District of Columbia, and the U.S Virgin Islands**. New York City and Illinois are exceptions. They operate according to their own regulations. We've listed them below.

UETA Overview

E-signatures are allowed by the UETA to fulfill any document signature requirement, except wills, codicils, and testamentary trusts. Electronic forms cannot be used to deny contracts, records, or signatures.

The UETA's criteria and definitions of secure electronic signatures are consistent with those outlined in ESIGN.

Illinois

Certain e-signatures are preferred by Illinois because they offer greater security. Secure e-signatures are those that are created using an asymmetric algorithm and a valid certificate issued from a certificate authority that conforms to the secretary's standards.

These signatures are considered to be the most secure and preferred by Illinois.

New York

New York, like Illinois, has decided to follow its own statutes and definitions. The state recognizes electronic signatures' legal validity and has created the role of an "electronic facilitator" within the state's IT department. This facilitator is responsible for overseeing technologies that improve government best practices, such as signing. He also implements the best practice guide to help with the implementation.

E-signatures are accepted in New York, as well as other states. However, there are a few exceptions. Documents that specify how a person or property will be distributed upon their death (e.g., wills, trusts, or powers of attorney) are not eligible for e-signatures.

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As new technology develops (e.g., blockchain), some states have modified or updated UETA laws in their respective states. To ensure compliance, it is recommended that you examine the current amendments in your state.

E-signatures are a widely accepted method for authenticating documents in the United States, though laws can differ depending on state and federal jurisdiction.

*Please note that laws governing e-signatures change frequently. This article does not replace professional legal advice.