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HR adVISoR

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© 2009 Thomson Reuters. This publication was created to provide you with accurate and authoritative inormation

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REVIEWInG yoUR HRIS SyStEm to EnSURE It CREatES admISSIBLE and PERSUaSIVE RECoRdS

admissibility risk, (4) compliance

risk, (5) adoption risk, and (6)

relative risk.3 Through the use o

the e -Risk Analysis Framework,

employers rst identiy, then mit-

igate, the most common risks to

the enorcement o their electron-

ically signed agreements or other

documents. Moreover, through

the identication and mitigation

process, most employers will con-

clude, as we have, that with an

appropriately designed and im-

plemented process, an employer

can actually create electronically

signed or acknowledged agree-

ments that are as enorceable, i

not more so, than those signed

with wet ink on paper.4

To demonstrate how an em-

ployer can use the e -Risk AnalysisFramework with its HRIS, this

article rst discusses the six risks

that the Framework helps em-

ployers identiy and then shows

how employers can develop a

process to mitigate those risks.

The article then discusses our

relevant HRIS court opinions5 to

show how the risks aced by each

employer in those situations were

Employers currently using or

considering moving to an elec-

tronic Human Resources Inor-

mation System (HRIS)1 should

review those systems to ensure

that any notices, policies, train-

ing, evaluations, codes o con-

duct, disclosures and contracts,

such as arbitration agreements or

restrictive covenants,2 generated

by the HRIS and signed or ac-

knowledged by employees elec-

tronically are as enorceable as

GREGORY T. CASAMENTO is a partner in the New York ofce o Locke Lord Bissell & Liddell LLP. Mr. Casamento’s practice ocuses on business, commercial, employment and intellectual property litigation. He has signifcant experience litigating restrictive covenant,breach o contract and the enorcement o arbitration agreements beore both State and Federal Courts. As a member o Locke Lord’s Technology Transactions group, Mr. Casamentoregularly assists clients in review o e-process systems. He is also highly knowledgeable ine-Matters (e-signatures, e-discovery, e-admissibility), and regularly addresses a number o

prestigious organizations and trade associations regarding the admissibility and enorceability

o e-signatures, e-contracts, and e-records.PATRICK J. HATFIELD is a Partner in the Corporate Department o the Atlanta ofce o Locke Lord Bissell & Liddell LLP and serves as co-chair o the frm’s Technology TransactionsGroup. Mr. Hatfeld’s practice is highly ocused on issues surrounding electronic signatures,outsourcing, and sotware licensing and development. Mr. Hatfeld is a requent and sought ater speaker and regularly addresses some o the most highly regarded industry associations in the country on electronic signatures and a number o e-Matters related topics.

HANNA NORVELL is a partner in the Houston ofce o Locke Lord Bissell & Liddell LLP. She is Board Certifed in Labor and Employment Law by the Texas Board o Legal Specialization, and her practice exclusively serves employers regarding any employment related issues, including compliance, counseling and litigation. She has successully litigated the issue o an enorceable arbitration agreement signed electronically wherein the matter wascompelled to arbitration.

human resourCes informationsystems: reVieWinG your hris

system to ensure it Creates admissible and persuasiVe

reCordsgreory t. casameo, parik J. hafeld, ad haa norvell

those signed in wet ink on paper.

Over the last ew years, courts

have explained the faws to such

systems when the enorceabil-

ity o these agreements are chal-

lenged by employees.

To help employers mitigate

the risks, human resources proes-

sionals can use a Six Point e -Risk

Analysis Framework that analyzes

the ollowing six risks associated

with an HRIS: (1) authentica-

tion risk, (2) repudiation risk, (3)



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to paper documents and wet ink

signatures apply also to electronic

documents signed electronically,

stored electronically and retrieved

electronically.6 Thus, the Federal

Rules o Evidence, or their state

equivalents, will govern the ad-

missibility o documents present-ed, signed, secured, archived and/

or retrieved by an HRIS.7

Employers may use HRIS to

create what are oten reerred to as

“signing ceremonies.” These are

the processes by which employ-

ees sign documents in the HRIS,

in ways to satisy the admissibility

standards in the Federal Rules o

Evidence. Signing ceremonies are

useul to prove at trial the authen-

ticity o a document retrieved by

HRIS because the ceremony can

create a record o the entire signa-

ture ceremony process, including:

(a) the terms and conditions pre-

sented to the employee with which

the electronic signature will be

logically associated; (b) the specic

act o the employee expressing his

or her intent to be bound to those

terms and conditions, as called or

in those same terms and conditions;

and (c) the circumstances under

which the employee’s signature

was obtained.8 This inormation

all goes to establish the authentic-

ity o the document (containing the

terms and conditions) stored in the

HRIS. There will need to be one

or more witnesses who can explain

the process. Without the appropri-ate witness (rom the HRIS ven-

dor or the inormation technology

department) to provide an adavit

or live testimony as to items (a) to

(c) above, the evidence will not be

admissible and thereore a court is

likely to make a nding o no en-

orceable agreement.9

The standard or the authen-

tication o evidence under the

attached to or logically associ-

ated with his or her signature, but

claims that the document con-

tains terms and conditions di-

erent than those in the original

agreement because it was changed

ater it was signed or that what

they signed did not sucientlydescribe the terms or conditions

at issue or that the employee oth-

erwise did not receive some re-

quired notice.

HRIS oten can be congured

to reduce the repudiation risk ar

below such risk associated with

paper documents signed in wet

ink, especially multi-page docu-

ments or documents which reer

to other documents. For example,

HRIS can cryptographically seal

each document upon the signing

o that document by the employ-

ee, thereby rendering such docu-

ment unalterable without detec-

tion. Documents electronically

sealed in this ashion are likely to

pass the admissibility threshold

(see discussion below) and once

such documents are admitted intoevidence, employers are likely to

have meaningul, persuasive evi-

dence as to why such documents

could not have been altered with-

out detection and should there-

ore be enorced as written against

the employee.

a rk

This is the risk that a court re-

uses to admit into evidencecopies o electronic documents

generated, presented, signed, se-

cured, archived and retrieved by

the employer’s HRIS because o

evidentiary “authentication” is-

sues, a condition to admissibility

o any document. The rules o

evidence regarding authentica-

tion, including the required evi-

dentiary oundations, that apply

or could have been mitigated by

the e -Risk Analysis Framework.

siX point e-risK analysisframeWorK

ac rk

This is the risk that the person sign-

ing the agreement is in act not theperson he or she claims to be, also

reerred to as the “orger risk.” To

mitigate the Authentication Risk,

employers should congure their

HRIS to properly authenticate the

identity o the person signing. Em-

ployers can authenticate employees

on an HRIS through the use o se-

cure log-in names, passwords, and

pin numbers, inormation created

by and known only to the individual

employee. Deault or other access

by a supervisor or other person

should be avoided. With new em-

ployee applicants, employers can

use third-party databases to veriy

the applicant’s identity. Employers

should seek to record and archive

this authentication process, oten

reerred to as “capturing an audit

trail,” which the HRIS then se-curely archives or later secure re-

trieval i the employee claims he or

she never signed something on the

system. I the employer opts not

to include the authentication pro-

cess in the audit trail, then the em-

ployer may not have access to reli-

able evidence to establish the actual

identity o the employee. Ideally,

the employer calibrates the level o

authentication with the employer’sassessment o the authentication

risk within their organization.

r rk

This is the risk that the employ-

ee later repudiates the terms and

conditions in the record bearing

his or her signature. For example,

the employee acknowledges that

he or she signed the document



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In addition to the express lan-

guage o F.R.E. 901(b)(9), Im-

winkelried’s Evidentiary Founda-

tions provides a supplemental elev-

en-step process under the Rule

or the admission o computer

generated records.17 Most o the

testimony proered under these

eleven steps is a simple recitation

o acts that HRIS should meet.

More challenging is step our,

which requires expert testimony

that the “procedure has built-in

saeguards to ensure accuracy and

identiy errors…regarding com-

puter policy and system control

procedures, including control o

access to the database, control o access to the program, record-

ing and logging changes, backup

practices, and audit procedures to

assure the continuing integrity o

the records.”18

Expert witness testimony seek-

ing the admission o signatures

and documents rom the HRIS

pursuant to F.R.E. 901(b)(9)

would include: z The manner in which the

HRIS server(s), as appro-

priate, are used to gener-

ate electronic signatures and

documents;

z The reliability o these servers;

z Procedures or manual data

entry and system controls; and

z

Saeguards to ensure accu-racy and identiy errors (i.e.,

saeguards, access rules and

other controls on the en-

vironment that govern the

fow o inormation through

its system), tamper resistant

sotware, use o cryptograph-

ic technology, and that all o

these meet or exceed indus-

try standards.

which permits exhibits to be au-

thenticated by appearance, con-

tents, substance, internal patterns,

or other distinctive characteristics

“is one o the most requently

used [rules] to authenticate [elec-

tronic signatures] and other elec-

tronic records.”14 F.R.E. 901(b)(9), which authorizes authentica-

tion by “[e]vidence describing a

process or system used to produce

a result and showing that the pro-

cess or system produces an accu-

rate result,” is “one method o

authentication that is particularly

useul in authenticating electronic

evidence stored in or generated by

computers” and is requently used

as a litmus test or admissibility o

computer-related inormation.15

“[It] dictates that the inquiry into

the basic oundational admissibil-

ity requires sucient evidence to

authenticate both the accuracy o

the image and the reliability o the

machine producing the image.”16

HRIS should use a process

to secure each document ater

it is signed to allow employers

to congure the HRIS to meet

the admissibility standards under

the subsections in F.R.E. 901.

The testimony o a witness with

knowledge o the specic trans-

action will satisy F.R.E. 901(b)

(1), and a learned expert wit-

ness should suce under F.R.E.

901(b)(3). An expert witness

knowledgeable about the con-

tents, substance and distinctivecharacteristics o the HRIS and

the process o creating, present-

ing, signing, securing, archiving

and retrieving the documents in

question should satisy F.R.E.

901(b)(4), while expert testimony

describing how the HRIS ac-

complishes the oregoing accu-

rately should suce under F.R.E.

901(b)(9).

Federal Rules o Evidence is

contained in Rule 901, Require-

ment o Authentication or Iden-

tication, which provides that

“the requirement o authentica-

tion or identication as a condi-

tion precedent to admissibility is

satised by evidence sucient tosupport a nding that the matter

in question is what its proponent

claims.”10 As stated throughout

the relevant case law, “‘reliability

must be the watchword’ in deter-

mining the admissibility o com-

puter generated evidence.”11 The

“actors [must] eectively address

a witness’s amiliarity with the

type o evidence and the method

used to create it, and appropriate-

ly require that the witness be ac-

quainted with the technology in-

volved in the computer program

used to generate the evidence.”12

Certain subparts o Sections

901 and 902 o the Federal Rules

o Evidence are particularly suit-

ed to address the admission o

electronic signatures and records

signed using an HRIS: Sections901(b)(1), (3), (4) and (9), and

902(7) and (11). Rules 901(b)(1),

(3), (4) and (9) require witness tes-

timony to authenticate proered

evidence, while 902(7) and (11)

allow or sel-authentication.13 An

HRIS need only be authenticated

once through one o these meth-

ods, whichever is best applied to

the situation at hand.

F.R.E. 901

A witness with direct knowledge,

pursuant to F.R.E. 901(b)(1), or

an expert witness with learned

knowledge, pursuant to F.R.E.

901(b)(3), are certainly two airly

straightorward methods an em-

ployer could use to admit hard

copies o documents signed us-

ing an HRIS. F.R.E. 901(b)(4),



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ment to Rule 803(6) to allow

proponents o business records to

qualiy them or admittance with

an adavit or similar written

statement rather than the live tes-

timony o a qualied witness. In

addition to the adavit require-

ments, there is a notice require-ment to aord opposing parties an

opportunity to review the docu-

ment and adavit to challenge

its authenticity.23 Thus, assuming

no challenge, F.R.E. 902(11) is

one o the best ways to secure the

admission into evidence o signa-

tures and documents executed us-

ing an HRIS.

As explained above, critical in

the admissibility analysis and the

overall enorceability o documents

executed using an HRIS is the re-

quirement o a secure method to

archive and retrieve the documents

so they cannot be altered ater sig-

nature. The HRIS should also use

a orm o e-vaulting, such that the

HRIS can securely archive signed

documents to show the documents

were not altered ater signature, andsecure retrieval capabilities. Assum-

ing these guidelines are ollowed,

the HRIS should produce admis-

sible agreements.

Cc rk

The Compliance Risk is dened

as the risk that the HRIS ails to

comply with legal and regula-

tory requirements. This might

result in employees being able tovoid electronically signed agree-

ments.24 Employers must be

aware that their HRIS may need

to be congured to meet certain

legal and regulatory requirements,

depending on states where the

agreements are signed, industry,

or other issues. This might require

that each agreement presented

and/or signed by the employee is

an electronic record and electronic sig-

nature under Rule 902(7).”20

F.R.E. 902(11) o the Federal

Rules o Evidence might also

be considered or authentication

o documents presented, signed,

secured, archived and retrieved

using electronic signatures andrecords generated by an HRIS.

As Judge Grimm noted: “Rule

902(11) also is extremely useul

because it aords a means o au-

thenticating business records un-

der Rule 803(6), one o the most

used hearsay exceptions, without

the need or a witness to testiy

in person at trial.”21 The primary

reason one would seek to authen-

ticate electronic evidence using

this rule is that it permits a written

declaration by a custodian rather

than oral testimony, which under

most circumstances makes it pre-

erable to F.R.E. 901(b)(4) or (b)

(9). F.R.E. 902(11) addresses:

Certied domestic records o

regularly conducted activity.

The original or a duplicate o

a domestic record o regularlyconducted activity that would

be admissible under Rule 803(6)

i accompanied by a written

declaration o its custodian or

other qualied person, in a man-

ner complying with any Act o

Congress or rule prescribed by

the Supreme Court pursuant to

statutory authority, certiying

that the record—

(A) was made at or near the time

o the occurrence o the matters

set orth by, or rom inormationtransmitted by, a person with

knowledge o those matters;

(B) was kept in the course o the

regularly conducted activity; and

(C) was made by the regularly

conducted activity as a regular

practice.22

Rule 902(11) was designed to

work in tandem with an amend-

Following initial court deci-

sions recognizing the saeguards

o a particular HRIS might re-

duce the risk or uture challenges

and result in stipulations to the

authenticity o electronic signa-

tures created by that and com-

parable systems, such that in theinitial cases witness testimony is

required but in uture and sub-

sequent cases it is not. Notwith-

standing, rom the outset, there

will be ample evidence to lay the

appropriate oundation or the

admission o electronic signatures

created by the HRIS, assuming

risks are adequately managed and

appropriate witness testimony can

be obtained.

F.R.E. 902

Although in a major dispute testi-

mony may be necessary regarding

the HRIS and the authenticity o

its process, as noted above, docu-

ments presented, signed, secured,

archived and retrieved using the

HRIS may also be admitted as sel-

authenticating documents under

F.R.E. 902(7). Judge Grimm, in

the extremely thorough opinion

in Lorraine v. Markel , stated that:

“[e]xtrinsic evidence o authen-

ticity as a condition precedent to

admissibility is not required with

respect to the ollowing:…(7)

Trade inscriptions and the like.

Inscriptions, signs, tags, or labels

purporting to have been axed

in the course o business and in-dicating ownership, control, or

origin.”19 “Under Rule 902(7),

labels or tags axed in the course

o business require no authen-

tication. The HRIS will collect

and record inormation showing

the entire signature ceremony.

The identication markers alone

stored in the secure container

may be sucient to authenticate



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signature process has less risk than

the paper and wet ink process.

In having identied the six

risks that can be mitigated using

the e -Risk Analysis Framework,

we now move to a discussions o

our cases that demonstrate how

some o these risks have playedout in employment disputes.

Campbll v. Gnral Dynamics:f mg r, a, rv rk r uc a

ag

Campbell v. General Dynamics

Government Systems Corporation25

shows what can happen when a

company ails to adequately con-

sider the repudiation risks when

implementing a new HRIS pro-

cess. The decision also provides

some interesting discussion points

or employers looking to mitigate

the adoption and relative risks.

In that case, General Dynam-

ics ailed to ensure that its HRIS

gave Mr. Campbell, its employee,

adequate notice o the changes

in the terms o his employment,which allowed Campbell to re-

pudiate his employer’s arbitration

policy o which he had received

notice through email. Notwith-

standing the Court’s ailure to

enorce the arbitration agreement

against Mr. Campbell, it did dis-

cuss several methods employers

should consider in designing and

implementing an HRIS to miti-

gate the risks identied by the e -Risk Analysis Framework.

General Dynamics sought to re-

quire all o its employees, as a con-

dition o their continued employ-

ment, to resolve all uture employ-

ment disputes or claims through

binding arbitration. Instead o us-

ing its traditional method o send-

ing employees such policy changes

in hard copy that required the

ated with a paper and wet ink

process. Considering the risks o

the electronic signature process

relative to the corresponding risks

associated with the paper and wet

ink signature process allows users

to better assess the risks inherent in

the electronic process, versus risksthat are inherent in every process.

Our view is that HRIS is ca-

pable o being congured to re-

duce the risks considerably below

the corresponding risks o using pa-

per and wet ink. For example, an

HRIS can be congured to pre-

vent an agreement rom being

signed by the employee i there

are any blanks in the document

to be signed, prevent any docu-

ment rom being submitted by

the employee unless all o the

required steps, including execu-

tion o or acknowledgement o

receipt o all disclosures, are ul-

lled, prevent loss o all or por-

tions o documents, and prevent

employees rom crossing out or

modiying portions o documents

or other issues common with

hard copy agreements. Moreover,

an HRIS can more easily track

which employees have signed the

necessary agreements and alert

the necessary personnel to take

actions regarding unsigned docu-

ments. Once signed, the HRIS

secures the agreements rom be-

ing altered without detection or

lost. Employers may congure

HRIS or various types o signa-ture ceremonies or various types

o employees. This conguration

can calibrate the risk mitigation

approaches discussed in this arti-

cle, with the employer’s concerns

about the various risks or each

category o employee. This can

be done in such a way that the

employer can, in all likelihood,

congure HRIS so the electronic

presented in such a way, i.e., con-

tent, sequence, and disclosure, so

that no regulatory objection can

be made to enorcement. Users

may congure HRIS to reduce

the compliance risk associated

with the transactions below the

risk associated with similar trans-actions using wet ink and paper

by designing the HRIS so that all

regulatory disclosures are made

beore an employee can sign,

through use o the audit trail, and

setting up auto notications when

certain compliance issues arise.

a rk

This is the risk that employ-

ees will ail to adopt the HRISbecause it is too burdensome,

complicated, or otherwise non-

employee riendly. Companies

should be able to reduce the

adoption risk by beta testing their

HRIS with a select group o em-

ployees to work out any adoption

type issues. Employers should also

oer employees various types o

incentives to encourage HRIS

use, such as making employee payand benets inormation avail-

able on the HRIS, requiring em-

ployees to use HRIS or vacation

or other personnel requests, or

even providing other incentives

to get employees to use the sys-

tem. Moreover, the HRIS should

be designed so that the system

tracks and, when necessary, will

send alerts to HR, management

or other designated parties, i em-ployees ail to adopt and thereore

do not sign agreements or review

notices presented through the sys-

tem. Such eorts should mitigate

against the adoption risk.

rv rk

It is important or employers to

consider the risks o a given HRIS

in the context o the risks associ-



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Both opinions discussed the

various reasons General Dynamics’

email provided insucient notice

to Mr. Campbell, each o which

is instructive in highlighting one

or more o the risks identied and

mitigated by application o the e -

Risk Analysis Framework.In an example o how General

Dynamics ailed to mitigate the

adoption risk, the court discussed

how this was General Dynamics’

rst attempt at communicating a

change to its employment policies

to its employees through email

instead o through its traditional

method, e.g., by sending the em-

ployee an actual copy o the pol-icy memorializing the signicant

change in writing, requiring the

employee’s “wet ink” signature,

and then placing the signed writ-

ing in the employee’s personnel

older. In ailing to mitigate the

risk, General Dynamics could not

show that Mr. Campbell, a user

o the paper and wet ink system,

adopted (or used) the new HRIS.

General Dynamics also ailedto mitigate the repudiation risk

because it ailed to have Mr.

Campbell elicit a response or ac-

knowledgment he had read the

e-mail and the link to the new

policy, such as requiring him to

acknowledge receipt or to click a

box on a computer screen indi-

cating that he had read the pol-

icy. This allowed Mr. Campbell

to repudiate the agreement, or in

other words, argue that while he

had received the email, he never

saw the agreement.

General Dynamics ailed to

state in the substance o the e-

mail that the new arbitration pol-

icy had contractual signicance

and that the policy contained an

arbitration provision that would

employees wet ink signature to ac-

knowledge receipt o the change,

General Dynamics notied all o

its employees through a new email

system. There was no dispute that

Mr. Campbell received the e-mail,

however, the actual arbitration

policy and the revised employeehandbook were not contained in

the text o the e-mail. Instead, the

email contained a hyperlink that, i

accessed by Mr. Campbell, brought

him to a Web site containing the

policy. General Dynamics’ system

did not track whether Mr. Camp-

bell accessed the Web site contain-

ing the policy.

Mr. Campbell brought suit incourt seeking to recover damages

or discrimination on the basis o

a disability. General Dynamics re-

sponded with a motion to compel

arbitration under the electroni-

cally sent arbitration policy. As

reported in the District Court and

First Circuit Court o Appeals de-

cisions, Mr. Campbell argued that

the policy did not apply to him

because the General Dynamics’notication process, consisting o

the email containing the hyper-

link, did not provide him with

sucient notice o the policy

change requiring all employees to

arbitrate employer-employee dis-

putes. Thereore, Mr. Campbell

argued General Dynamics could

not bind him to arbitration.

In separate opinions, both theDistrict Court and then the First

Circuit Court o Appeals sided

with Mr. Campbell, nding that

General Dynamics’ e-mail process

did not give Mr. Campbell su-

cient notice o a change in policy

necessary or the Court to hold

that Mr. Campbell had waived

his right to bring employment

discrimination claims in court.

waive the employee’s right to

bring workplace disputes in court.

Based on General Dynamic’s

ailures, the court held that, “a

reasonable employee could read

the e-mail announcement and

conclude that the Policy pre-

sented an optional alternative tolitigation rather than a mandatory

replacement or it.”26 Notwith-

standing the court’s decision not

to enorce the arbitration agree-

ment against Mr. Campbell, the

court did explicitly recognize, an

“e-mail, properly couched, can be

an appropriate medium or orm-

ing an arbitration agreement.”27

The lesson o General Dynam-

ics is simple: mitigate up ront therisks in the design and implemen-

tation phase o an HRIS so that

it clearly requires employee adop-

tion, and provides clear and ex-

plicit notice to employees o the

terms, conditions or changes in

their employment, thereby pre-

venting repudiation and allow-

ing the employer to prove that

its employees received notice o

these terms, conditions or chang-

es and should be bound.

Krr v. Dillard: t hris’f mg

ac, a rv rk l C’ r ec

a ag

The recent case o Kerr v. Dillard

provides a good example o where

an HRIS implementation ailed

to address the authentication, rel-ative and adoption risks.28 There,

Dillard’s29 implemented an HRIS

that required all o its store asso-

ciates to electronically sign em-

ployment arbitration agreements

through mydillards.com, Dillard’s

employee intranet system. Every

Dillard’s associates had a unique,

condential password, created by

and known only to the associate.



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Dillard’s, however, also gave store

supervisors the ability to log in to

an associate’s account by resetting

the associate’s condential pass-

word and logging in under the as-

sociate’s deault password.

Ater an associate accessed my-

dillards.com, the system requiredthe associate to execute the em-

ployee arbitration agreement by:

(1) entering his or her social se-

curity number or associate iden-

tication number (AIN); (2) en-

tering his or her secure password;

and (3) clicking the “accept”

option at the bottom o the ar-

bitration agreement screen. The

system would then generate an

e-mail to the associate’s Dillard’s

e-mail account, conrming that

the associate had signed the arbi-

tration agreement.

In an example o Dillard’s ail-

ing to mitigate the adoption risk,

or a period o ve months Ms.

Kerr reused her supervisors’ re-

peated requests that she log on

to her mydillards.com account to

electronically sign her employee

arbitration agreement. Ms. Kerr

based her reusal on the misun-

derstanding that when she rst

became employed at Dillard’s,

she had not signed an employee


believed that i she accessed the

HRIS and electronically signed

the employee arbitration agree-

ment, she would give up some o

her legal rights.Five months ater Dillard’s

rst implemented the employee

arbitration requirement on my-

dillards.com, Ms. Kerr had still

not adopted the system. In act,

the evidence at trial showed Ms.

Kerr had only accessed the system

on three occasions: February 10,

April 28, and August 24, 2006,

with the April 28 access being

the subject o the litigation. On

the previous day, April 27, Ms.

Kerr had missed work. When Ms.

Kerr’s supervisor asked Ms. Kerr

why she had missed a scheduled

day o work, Ms. Kerr attribut-

ed her absence to not knowing

how to access her work sched-ule through mydillards.com. Ms.

Kerr’s supervisor then took Ms.

Kerr to the Dillard’s employee

break room, where Dillard’s had a

computer kiosk or employee use,

to show Ms. Kerr how to access

her schedule on mydillards.com,

and the supervisor actually ac-

cessed her account or her through

the deault password. The system

recorded that at or near this time,

Ms. Kerr signed her employment

arbitration agreement and a con-

rmation e-mail was sent to Ms.

Kerr’s Dillard’s e-mail account,

which was opened. The system

records also demonstrated that the

e-mails on Ms. Kerr’s intranet ac-

count were opened on only three

previous occasions: February 10,

April 28 and August 24, 2006.

Some time later, Dillard’s

terminated Ms. Kerr, and in re-

sponse, she brought race dis-

crimination claims against Dil-

lard’s. Dillard’s moved to compel

arbitration on the basis o the

electronically signed employee


denied ever having signed the ar-

bitration agreement or having re-

ceived the conrming e-mail.Unortunately or Dillard’s,

its system did not adequately ad-

dress the authentication and re-

pudiation risks because it could

not show that only Ms. Kerr had

access to her account. Thereore,

Dillard’s was unable to meet its

burden o proo at trial to show,

by a preponderance o the evi-

dence, that Ms. Kerr knowingly

and intentionally executed the ar-

bitration agreement.30 While the

court did not accuse Ms. Kerr’s

supervisor o signing the arbitra-

tion agreement, it recognized

that such a scenario was at least

possible, or even that Ms. Kerr

may have accidentally executedthe arbitration agreement hersel,

thereby not knowingly and in-

tentionally signing it.31 Dillard’s

might have overcome this i it

could have shown that Ms. Kerr

had adopted the system, but, since

Ms. Kerr had only accessed the

system on three occasions over a

period o at least ve months, it

was unable to do so. Since Dil-

lard’s ailed to meet its burden o

proo at trial, the court denied its

motion to compel Ms. Kerr to

arbitrate her employment claims

and the litigation continued, in

the precise orum the employer

sought to avoid.

Vrizon v. Pizzirani:r C ovc o rvw

a Gv

Verizon Communications v. Pizzi-

rani demonstrates that when an

employer can show a properly de-

signed and risk mitigating HRIS,

a court is more likely to bind the

employee to terms, conditions or

changes in employment commu-

nicated through the HRIS.32

Plainti Verizon sued Mr.

Pizzirani, a ormer highly com-

pensated executive in Verizon’sbroadband division who had re-

signed to work or a Verizon com-

petitor, Comcast. Verizon sought

enorcement o a 12-month non-

competition restrictive covenant

that Mr. Pizzirani had received

in an e-mail as a participant in

Verizon’s Long Term Incentive

Plan, which awarded Verizon

employees with both Restricted



HR adVISoR

JULy/aUGUSt 2009

26










Stock Options and Perormance

Stock Units (“Awards”). Mr. Piz-

zirani, as an Award recipient, had

been advised in bolded language

through e-mails rom Verizon’s

human resources department in

2005 and 2006 o the ollowing

terms and conditions relating tohis acceptance o the Awards:

As you access you [sic] award on-

line, it is important that you read

and understand the terms and

conditions o the Award Agree-

ments. When accepting your

award on-line, you acknowledge

that you have read both the award

agreements and Plan document,

including the terms [and] condi-

tions regarding vesting, restrictive

covenants and the provisions con-

cerning award payouts.33

On March 17, 2005, Mr. Piz-

zirani clicked on the “I AC-

KNOWLEDGE” button on the

bottom o the e-mail, whereby he

acknowledged that he understood

that, in accepting such Award,

he would be bound by the non-

competition restrictive covenant.

In 2006, however, Mr. Pizzi-

rani did not click on the “I AC-

KNOWLEDGE” button, which

resulted in the HRIS inorming

human resources that Mr. Pizzi-

rani had ailed to acknowledge.

In response to a call rom Ve-

rizon’s human resources, Mr.

Pizzirani drated and sent the ol-

lowing e-mail to an employee in

the human resources department:“John I will read and agree to

the terms and conditions o the

award agreement and Plan docu-

ments.”34 Ater Verizon’s human

resources department received the

email certication that Mr. Pizzi-

rani had read and understood and

agreed to the terms o the Award,

that department granted Mr. Piz-

zirani access to the agreement on-

line where he acknowledged and

agreed to all terms.

In his deense, Mr. Pizzirani did

not contest that he had executed the

Award Agreements by electronic

signature, but instead claimed that

he did not read the contracts prior

to electronically signing them andasserted that he was completely un-

aware o the restrictive covenants

contained in them until October

2006. In essence, Mr. Pizzirani at-

tempted to repudiate the terms o

his agreement by claiming he never

read them.

The court reused, enorcing

the non-competition agreements

against Mr. Pizzirani and barring

him rom accepting a competi-

tor’s oer o employment. The

court recognized that, under

“New York law, a valid contract

is ormed by maniestation o as-

sent, including checking a box

or clicking a button on a com-

puter screen, as in this case[,]”35

and that “parties are bound by

the contracts they sign, whether

or not the party has read the con-

tract so long as there is no raud,

duress or some other wrongul act

o the other party.”36 The court

also stated that Mr. Pizzirani had

a reasonable opportunity to know

the essential terms and character

o the agreements, Verizon en-

couraged him to read them, and

he was adequately warned by e-

mail that, through his acceptance,

he certied that he had read, un-derstood and agreed to be bound

by the agreements and restrictive

covenants.

Mr. Pizzirani also complained

that he was only able to view the

document in a small box on the

computer screen, but Verizon

demonstrated that its system gave

Mr. Pizzirani the ability to print

the agreements, save them to his

hard drive or expand the deault

size viewing screen. The court

also ound it compelling that Mr.

Pizzirani had no time pressure

to read and sign the agreements.

Verizon gave him more than a

month to read and electronically

sign the documents.Because Verizon went to great

lengths to ensure that its employ-

ees understood the importance o

reading the documents, the court

ound little evidence that Veri-

zon intended to misrepresent the

terms o the Award Agreements.

Bll v. Hollywood: te’ evc Kwg & V C

b e

Bell v. Hollywood Entertainment

Corporation presents another ex-

ample o an HRIS that did ad-

dress the risks raised in the e -Risk

Analysis Framework. In that case,

the court granted the employer’s

motion to compel the employee

to arbitration because the HRIS

eectively communicated to Ms.

Bell the requirement that she ar-

bitrate all employment disputes.37

There, Ms. Bell completed her

employment application pro-

cess electronically either through

a Hollywood in-store kiosk or

over the Internet through Hol-

lywood’s Web site. Hollywood’s

application process required, as a

condition to Ms. Bell’s employ-

ment, that she agree to submit all

claims involving workplace dis-putes to binding arbitration.

Ms. Bell later commenced an

action against Hollywood or

maintaining a hostile work en-

vironment, allowing sexual ha-

rassment to occur in the work-

place and or civil battery. As

Mr. Campbell had argued against

General Dynamics, and Ms. Kerr

against Dillard, Ms. Bell argued



HR adVISoR

JULy/aUGUSt 2009

27










that she had received inadequate

notice rom Hollywood concern-

ing the requirement that all o her

workplace employment claims be

resolved through binding arbitra-

tion. Unlike in the other cases,

however, the court in Hollywood

ound or the employer, hold-ing that Ms. Bell had agreed to

arbitrate her workplace disputes

because Hollywood could show,

conclusively, that Ms. Bell had

received inormation about the

arbitration policy, provided evi-

dence that she read and under-

stood the terms and conditions

o the policy, and that she had

agreed to be bound to them as a

condition o her employment.38

The appellate court armed the

lower court’s decision to compel

arbitration because it ound that

Ms. Bell “had the legal capacity

to contract, signed the agreement

and was suciently inormed re-

garding the program. She was

inormed on how to obtain addi-

tional inormation, conrmed that

she understood how to obtain ad-

ditional inormation, and know-

ingly and voluntarily consented to

arbitrate her employment claims

against [Hollywood].”39

In analyzing the risks identied

in the e -Risk Analysis Frame-

work, one need only look to the

actors relied upon by the court

in reaching its decision. To mini-

mize repudiation, Hollywood, in

its electronic application process,presented Ms. Bell with a screen

that inormed her that all claims

would be submitted to arbitra-

tion pursuant to Hollywood’s

Employment Issue Resolution

Program (EIRP), with a link to

a summary o the EIRP Rules

or, i Ms. Bell desired, a link to

a Web site containing a ull copy

o the rules and required that Ms.

Bell either acknowledge or deny

that she knew how to access the

connecting links. The Holly-

wood system also minimized re-

pudiation by requiring Ms. Bell

to choose “yes” or “no” in re-

sponse to her consent to arbitrateany and all employment disputes

with Hollywood, thereby con-

rming her agreement. Finally,

Hollywood’s system also orced

Ms. Bell to conrm that she knew

how to access Hollywood’s Web

site to obtain the complete arbi-

tration policy (even though there

was no apparent evidence she ac-

tually reviewed such policy).

40

The lesson o Bell v. Hollywood

or employers looking to imple-

ment an HRIS is the same as that

discussed above, in connection

with Campbell v. General Dynam-

ics and Kerr v. Dillard : employers

must design and implement their

system so it mitigates the prevent-

able risks.

n

notes1. The term HRIS is used broadly to include

any electronic computerized system that

lets employers and employees interact on

employment related issues.

2. Employer-employee notices, policies,

disclosures and agreements will be

collectively reerred to as “agreements”

throughout this article.

3. Locke Lord Bissell & Liddell LLP has

developed the Six Point e-Risk Analysis

Framework through its work in helping

clients identiy and mitigate the risks in

moving to e-process solution.

4. Problems such as lost or unsigned signature

pages, pen and ink modication to

agreements, lost, missing or misplaced pages

and/or personnel les, all become problems

o the past, or, more appropriately,

problems o the paper and wet ink world.

5. Campbell v. General DynamicsGovernment Systems Corp., 407 F.3d 546,

16 A.D. Cas. (BNA) 1361, 151 Lab. Cas.

(CCH) P 60002 (1st Cir. 2005); Verizon

Communications Inc. v. Pizzirani, 462

F. Supp. 2d 648 (E.D. Pa. 2006); Bell v.

Hollywood Entertainment Corp.,, 2006-

Ohio-3974, 2006 WL 2192053 (Ohio Ct.

App. 8th Dist. Cuyahoga County 2006);

Kerr v. Dillard Store Services, Inc., 2008

WL 687014 (D. Kan. 2008).

6. Readers should also note that contractual

enorceability is governed by state law,

regardless o whether the dispute is heard

in ederal or state court. Nearly all states

require the same three elements or the

ormation o a contract: (1) a meeting o

the minds, (2) an oer and acceptance,

and (3) the exchange o consideration (the

exchange o something o value).

7. Many states have adopted rules o evidence

that track the Federal Rules o Evidence

(FRE). For purposes o this article all cited

cases are based on the FRE or state law

that ollows the FRE. This article does not

address admissibility concerns beyond legal

authentication.

8. Repeated use o the same or similar signing

ceremonies will also greatly contribute to

the admissibility o documents signed usingan HRIS.

9. This would require the employer to

provide a witness with personal or expert

knowledge to testiy (in person or via

adavit) as to how each document was

presented, signed, secured ater signature

to render it unalterable without detection,

archived, retrieved and printed. This

person will also testiy as to the integrity

and security o each system involved in

creating, securing, archiving, retrieving

and printing the document and should be

qualied as an expert in that eld.

EXHIBIT 1

Use the e-Risk Analysis Framework to Identify and Mitigate the Risks Associated

with the Design and Implementation of an HRIS

Thee -RiskAnalysisFrameworkisdesignedtoassistemployersinidentifyingand

mitigatingthesixprincipalrisksofanHRIS.Themitigationoftheseriskswillhelp

employersavoidthesortsofissuesraisedintheCampbell v.General Dynamics ,Kerr

v. Dillard ,Bell v. Hollywood andVerizon v. Pizzirani cases,andshouldallowemployers

toconclude,aswedofromourownexperiencewithourclients,thatcompaniescan,

throughtheuseofawellthought-outHRIS,actuallydesignandimplementasystem

thatequateswith,andinmanycasesreduces,therisksassociatedwithhaving

employeescontinuetosignnotices,acknowledgementsoragreementsinwetink,and

thenstoringthosedocumentsinhardcopy.



HR adVISoR

JULy/aUGUSt 2009







26. Campbell v. General Dynamics

Government Systems Corp., 407 F.3d 546,

558, 16 A.D. Cas. (BNA) 1361, 151 Lab.

Cas. (CCH) P 60002 (1st Cir. 2005).



555, 16 A.D. Cas. (BNA) 1361, 151 Lab.

Cas. (CCH) P 60002 (1st Cir. 2005).

28. Kerr v. Dillard Store Services, Inc., 105Fair Empl. Prac. Cas. (BNA) 1298, 92

Empl. Prac. Dec. (CCH) P 43483, 2009

WL 385863 (D. Kan. 2009).

29. The Dillard Department Store is commonly

reerred to as Dillard’s, so other than in the

case name, we use that vernacular.

30. Kerr v. Dillard Store Services, Inc., 105

Fair Empl. Prac. Cas. (BNA) 1298, 92

Empl. Prac. Dec. (CCH) P 43483, 2009

WL 385863 (D. Kan. 2009).

31. Kerr v. Dillard Store Services, Inc., 105

Fair Empl. Prac. Cas. (BNA) 1298, 92

Empl. Prac. Dec. (CCH) P 43483, 2009WL 385863 (D. Kan. 2009).

32. Verizon Communications Inc. v. Pizzirani,

462 F. Supp. 2d 648 (E.D. Pa. 2006).


462 F. Supp. 2d 648, 652 (E.D. Pa. 2006).


462 F. Supp. 2d 648, 653 (E.D. Pa. 2006).


462 F. Supp. 2d 648, 655 n.3 (E.D. Pa.

2006).


462 F. Supp. 2d 648, 655 (E.D. Pa. 2006)

(internal quotations omitted).37. Bell v. Hollywood Entertainment Corp.,

2006-Ohio-3974, 2006 WL 2192053

(Ohio Ct. App. 8th Dist. Cuyahoga

County 2006).

38. Bell v. Hollywood Entertainment Corp.,

2006-Ohio-3974, 2006 WL 2192053


County 2006).

39. Bell v. Hollywood Entertainment Corp.,

2006-Ohio-3974, 2006 WL 2192053


County 2006).

40. The Bell v. Hollywood court even quoted

rom Campbell v. General Dynamics, in

noting that a “signature may not be

denied legal eect or enorceability solely

because it is in electronic orm … [and a]

contract may not be denied legal eect or

enorceability because an electronic record

was used in its ormation.”

2. The computer is reliable.

3. The business has developed a

procedure or inserting data into

the computer.

4. The procedure has built-in

saeguards to ensure accuracy and

identiy errors.

5. The business keeps the com-puter in a good state o repair.

6. The witness had the computer

readout certain data.

7. The witness used the proper

procedures to obtain the readout.

8. The computer was in work-

ing order at the time the witness

obtained the readout.

9. The witness recognizes the

exhibit as the readout.

10. The witness explains how he

or she recognizes the readout.

11. I the readout contains strange

symbols or terms, the witness ex-

plains the meaning o the symbols

or terms or the trier o act.

18. In re Vee Vinhnee, 336 B.R. 437,

447 (B.A.P. 9th Cir. 2005). Opposing

parties oten allege that computer records

have been tampered with and thus lack

authenticity. Such claims have been

viewed as “almost wild-eyed speculation…

without some evidence to support such a

scenario….” U.S. v. Whitaker, 127 F.3d595, 602, 47 Fed. R. Evid. Serv. 1197 (7th

Cir. 1997).

19. Lorraine v. Markel American Ins. Co., 241

F.R.D. 534, 549, 73 Fed. R. Evid. Serv.

446 (D. Md. 2007).


F.R.D. 534, 73 Fed. R. Evid. Serv. 446

(D. Md. 2007), quoting Weinstein’s Federal

Evidence § 900.07[3].



446 (D. Md. 2007).

22. Federal Rules o Evidence 902 (11).

23. Federal Rules o Evidence 902 (11) at 773

at ootnote 4.

24. A regulatory violation does not

necessarily void an agreement, or even

make it voidable, but may just lead to

penalties or nes.



16 A.D. Cas. (BNA) 1361, 151 Lab. Cas.

(CCH) P 60002 (1st Cir. 2005).

10. See also Lorraine v. Markel American Ins.

Co., 241 F.R.D. 534, 541-542, 73 Fed. R.

Evid. Serv. 446 (D. Md. 2007).

11. State v. Swinton, 268 Conn. 781, 812,

847 A.2d 921 (2004) (applying the ederal

standard to a state case.)

12. State v. Swinton, 268 Conn. 781, 813, 814,

847 A.2d 921 (2004) (applying the ederal

standard to a state case.)

13. Magistrate Judge Paul W. Grimm’s opinionin Lorraine v. Markel American Insurance

Company provides ones o the best analyses

to date o the admissibility o electronic

evidence, which broadly could include

electronic signatures. Lorraine v. Markel

American Ins. Co., 241 F.R.D. 534, 542, 73

Fed. R. Evid. Serv. 446 (D. Md. 2007). See,

e.g .: In re Vee Vinhnee, 336 B.R. 437 (B.A.P.

9th Cir. 2005) (proponent ailed to properly

authenticate exhibits o electronically stored

business records); U.S. v. Jackson, 208 F.3d

633, 638, 53 Fed. R. Evid. Serv. 1030 (7th

Cir. 2000) (proponent ailed to authenticate

exhibits taken rom an organization’s Web

site); St. Luke’s Cataract and Laser Institute,

P.A. v. Sanderson, 70 Fed. R. Evid. Serv.

174 (M.D. Fla. 2006) (excluding exhibits

because adavits used to authenticate

exhibits showing content o web pages

were actually inaccurate and aants lacked

personal knowledge o acts); Rambus, Inc.

v. Inneon Technologies AG, 348 F. Supp.

2d 698, 66 Fed. R. Evid. Serv. 16 (E.D.

Va. 2004) (proponent ailed to authenticate

computer generated business records); Wady

v. Provident Lie and Accident Ins. Co. o

America, 216 F. Supp. 2d 1060 (C.D. Cal.

2002) (sustaining an objection to adavit

o witness oered to authenticate exhibitthat contained documents taken rom

deendant’s Web site because aant lacked

personal knowledge); Indianapolis Minority

Contractions Association, Inc. v. Wiley,

1998 WL 1988826 at *7 (S.D. Ind. 1998),

judgment a’d, 187 F.3d 743 (7th Cir. 1999)

(proponent o computer records ailed to

show that they were rom a system capable

o producing reliable and accurate results,

and thereore, ailed to authenticate them).”



446 (D. Md. 2007).

15. Lorraine v. Markel American Ins. Co., 241F.R.D. 534, 549, 73 Fed. R. Evid. Serv.

446 (D. Md. 2007).

16. State v. Swinton, 268 Conn. 781, 811, 847

A.2d 921 (2004).

17. Edward J. Imwinkelried, Evidentiary

Foundations, 58-59 (LexisNexis 6th ed. 2005).

1. The business uses a computer.