Last month, the United States Court of Appeals for the Second Circuit found that an employee’s sworn statement that she never electronically signed (or even saw) an arbitration agreement during the onboarding process were, alone, enough to avoid arbitration. This surprising decision could make it easier for employees to rely on even dishonest claims that they “never” signed an employee handbook, acknowledgment, non-compete or other agreement as a condition of their employment with a company.
Barrows v. Brinker
Savannah Barrows worked at a Chili’s restaurant owned by Brinker International Payroll Company, L.P. (Brinker), which she sued for various wages claims after she was terminated. In response to Barrows’ federal lawsuit, Brinker argued that Barrows had purportedly signed an arbitration agreement at the start of her employment with the company and moved to dismiss the case and compel arbitration. In support, Brinker relied on a significant amount of evidence, including:
- The electronically signed arbitration agreement with the electronic confirmation certificate
- Records showing that Brinker was the registered owner of the IP address of the computer on which the arbitration agreement was purportedly signed
- Timesheets from Barrows, showing that she was working at the restaurant on the date the arbitration agreement was purportedly signed
- Affidavit testimony about Brinker’s onboarding process, including the secure login and password process for the electronic program
- Affidavit testimony stating that neither the manager nor any other employees had never completed any onboarding documents for Barrows.
Chili’s also produced a handwritten signature on an arbitration agreement for Barrows’ co-plaintiff (but not Barrows) in the matter, which the appellate court believed undercut Brinker’s position.
In contrast, Barrows produced a single affidavit swearing that she had never: (i) completed any electronic paperwork for Brinker or its predecessor, (ii) used any of Brinker’s computers to sign onboarding documents while at Chili’s, (iii) accessed Chili’s website, electronic system or intranet site, (iv) heard of the electronic system used by Brinker during its onboarding process, (v) saw or signed the arbitration agreement, (vi) received or signed any document showing receipt of Brinker’s policies, and (vii) owned or lived in a house with a computer while employed at Chili’s.
Employee’s Single Sworn Statement Defeats Employer’s Motion to Dismiss
The Second Circuit held that the employee’s single sworn statement was alone enough to defeat Brinker’s Motion to Dismiss and avoid arbitration. The three-judge panel found that the Northern District of New York erred in discounting the evidentiary value of Barrows’ single affidavit and in finding it insufficient to alone defend against Brinker’s motion. The panel further held that there was a triable issue of fact as to whether Barrows “received, or ever became aware of, Brinker’s arbitration agreements, regardless of whether she ultimately signed them,” reviving the lawsuit at the federal trial court level for the parties to further hash out the issue.
Nonetheless, to soften the implication of this decision, the Second Circuit specifically avoids unreasonably expanding the holding. It warns that a single affidavit may not always defeat a motion to compel arbitration, stating that it may not meet the evidentiary bar where a party only states she does not “recall” signing an agreement rather than “denies” signing one at all. The panel also points out that the decision may not be the same in cases where a party’s single affidavit may be “blatantly contradicted” by evidence or based on speculation or conclusory.
Employers Should Review Their Onboarding Practices
In response to this decision, employers should review their onboarding practices, especially if they require employees to sign onboarding paperwork electronically. While this holding does not dictate that employers return to the practice of only using wet signatures, it does give employers a good opportunity to make sure that their established procedures are organized and clean. First, employees who electronically sign documents should be given confirmations of signatures and copies of the agreements for their own personal files. Doing this over e-mail or written correspondence is best so that you have a clear record of providing the agreements to the employee. Second, employers should be uniform in obtaining signatures on onboarding documents, trying not to mix and match electronic and wet signatures. Third, employers may want to consider limiting access to onboarding documents to only those employees with a need to review (e.g., management, HR, etc.) to avoid any suggestion of a forged or false signature. And, finally, employers may also want to employ a more secure and/or two-factor authentication for electronically signing documents to more easily prove that the employee actually signed the document.
For further questions or clarifications regarding this article, please contact Rob Gilmore (RSG@kjk.com; 216.736.7240), Alan Rauss (AMR@kjk.com; 216.736.7221) or Kirsten Mooney (KBM@kjk.com; 216.736.7239).