If a school district could totally eliminate paper from the yearly employment contracting process, would it? Could it? Should it? If a school district issues electronic employment contracts and requires employees to electronically sign the electronic contracts, are the electronic contracts even enforceable? The short answer is “Yes!” As long as employees agree to participate in an electronic transaction, electronic contracts are as valid and enforceable as paper contracts. However, if an employee does not actively agree to participate in an electronic transaction, an electronic contract will not be valid against that employee. Additional nuances regarding signing and retaining electronic contracts as well as state regulations of the contracts also come into play.

The Texas Uniform Electronic Transactions Act (UETA) governs electronic records (including electronic employment contracts) and electronic signatures relating to a contract, with few exceptions. Electronic records satisfy all legal requirements for written documents.[1] Electronic signatures satisfy all legal requirements for signatures.[2] Electronic documents with electronic signatures satisfy all requirements for a signed writing enforceable against the person who signed it.[3] Canceling health or life insurance are about the only HR actions that cannot be done via electronic transaction.[4]

To have a valid electronic transaction, all parties to the transaction must agree to conduct the transaction via electronic means.[5]  But no party has an automatic right to conduct transactions electronically.[6] A party, even though it has conducted a transaction electronically, retains the right to refuse to participate in future electronic transactions.[7]

Texas governmental regulation of electronic contracts

The Texas Department of Information Resources (DIR) and the Texas State Library and Archives Commission (TSLAC) jointly establish rules and regulations for electronic contracts. The DIR and TSLAC jointly prepared a guidance document entitled Guidelines for the Management of Electronic Transactions and Signed Records, which is available online at http://www.dir.state.tx.us/standards/UETA_Guideline.htm.  While the guide is not mandatory for local governments (though it is for state agencies), local governments may rely upon the guide for parameters on authenticating electronic signatures and transactions. The Guidelines focus on the two primary concerns about electronic transactions: signatures and delivery.

Electronic signatures

Signature authentication is the biggest potential hurdle in electronic contracting. The Act defines “electronic signature” as an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.[8] An electronic record or electronic signature is valid if it was “the act of the person.”[9] The party attempting to prove an electronic signature may show the act of the person in any manner, “including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.”[10]  The more robust a security protocol, the easier it will be to convince a trier of fact that the record and its electronic signature came from the person alleged.[11]

Was the contract signed on time?

In determining when an electronic record was sent and received, a record is “sent” when it is properly addressed (if needed) and leaves the control of the sender.[12]  A record is “received” when a record enters an information processing system controlled by the recipient and is received in a format capable of being processed by that system.[13] The record is considered received even if no one is aware that the record has been received.[14] This provision prevents recipients from avoiding delivery by failing to retrieve messages from a server, for example.[15] The sender, however, may not be able to prove that the intended record was received. Electronic receipts may establish that a record was received, but by themselves do not establish that the record sent was the record received.[16] This condition gives an “out” when an electronic document is received garbled or is otherwise unreadable.

Dotting Is and crossing Ts in electronic contracts

Some details still remain in electronic contracts. An educator's contract must be in writing, and the Board of Trustees must provide a copy of the contract to each teacher.[17] When the law requires information to be provided in writing, districts can meet the requirement by providing an electronic document as long as the document is capable of retention by the recipient at the time of receipt.[18]

State regulations apply procedural requirements to electronic contracts. For example, the contract must include the printed name of the electronic signer, as well as the date the electronic signature was executed, and both must be in human readable form.[19]  In addition, record retention rules apply to electronic records.[20] Under the record retention rules, electronic records (and any software or hardware necessary to access the records) must be maintained as long and destroyed in the same manner as paper records of the same type.[21] Electronic records must be stored in a way that they are retrievable.[22] For example, if the district were to receive a Public Information Act request that would result in the production of employment contracts, the storage system must be capable of searching and retrieving the electronic copies of the necessary documents.

Governmental entities (including school districts) must establish—by law, ordinance, or policy—that they will accept electronic records and signatures, and to what extent.[23] Policy CQ(LEGAL) probably already authorizes your district to participate in electronic transactions, at least to some degree.

Because parties to an electronic contract retain the option to refuse to participate in electronic transactions for future contracts, any electronic contracting system should re-verify the participants’ willingness to be bound via the electronic transaction each time the transaction takes place.[24] Districts should be prepared to provide a paper copy of a contract if an employee chooses not to participate in the electronic transaction process.

Summary

Electronic contracts can be fast, ecological, and economical, but pay careful attention to the details of retention and documentation of the agreement to assure they are also enforceable.

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