While technology—specifically computers—has helped to make all facets of human life easier, it certainly comes with its own drawbacks and learning curve. Who doesn’t love spending half an hour hopelessly trying to unjam a printer, or engaging in a constant back-and-forth email chain trying to send over a file that just will not open for the other person, or maybe the best one of all: editing a PDF. In all seriousness, technology has its ups and downs, and mastering every possible tool can be difficult. When you throw in other factors like legal compliance and the protection of sensitive information, you just might have to stop yourself from dropping everything and living a technology-free life off the grid.
The situation described above is likely a familiar one to many of us. At Payday HCM, we’ve had plenty of clients approach us with questions about the latest technologies and software, and how these things might impact how we do business together. We’re always committed to bringing the latest and greatest in technology and software to our clients—this means we’re also committed to helping out anyone who may have questions surrounding said technology and software. And when it comes to ensuring compliance with different rules and regulations in our technological landscape, there’s no better example than looking at the difference between wet and electronic signatures.
So, in this article, we’ll be taking a look at the differences between wet and electronic signatures and what you need to know about them. We’ll be explaining what a wet and electronic signature are as well as the key differences that make up the two. We’ll also go into why understanding the difference between the two, and knowing when to use them, can help your business remain compliant. By the end of this article, you’ll have all the information you need to ensure your business remains compliant and up-to-date.
In this article, you will learn:
- What Is A Wet Signature?
- What Is An Electronic Signature?
- Remaining Compliant With Wet And Electronic Signatures
What Is A Wet Signature?
A signature is as old as time—we’ll start by going over what a wet signature is and how they’ve declined in popularity over the years.
Wet Signature: Putting Pen To Paper
As the name implies, a wet signature is a physical signature where a person signs a document by hand, whether that be by pen or some other writing utensil. Wet signatures were obviously the most popular—and only—form of signature prior to the advent of electronic signature technology and the prevalence of digital documents.
Wet signatures are still used—it’s likely that you’ve signed some paper or document just recently. Seeing as a wet signature is performed physically by the person actually signing, there aren’t as many guidelines necessary to ensure their authenticity, unlike electronic signatures (but we’ll get to that later).
The Decline of Wet Signatures
As mentioned, wet signatures were the only form of signature up until the computer and electronic documents started to become more and more prevalent. At first, fax machines helped deliver documents requiring wet signatures, but as technology evolved and electronic signature programs became available, the landscape would soon change.
The biggest shift would come in June of 2000 with the Electronic Signatures in Global and National Commerce Act (E-Sign Act), which validated electronic documents and signatures regarding financial transactions so long as the consumer provided proper consent. The E-Sign Act shifted the landscape around validating documents and helped usher in the age of digital documents.
What Is An Electronic Signature?
The signing of the E-Sign Act now brings us to the prevalence of electronic signatures—now we’ll break down what they are.
Electronic Signatures: Putting Cursor to PDF
Like wet signatures, an electronic signature is relatively self-explanatory: a digital version of a signature that is used to sign documents virtually. Electronic signatures can take many forms, from using the computer mouse like a pen to sign to a stamp-like version of a signature to just a simple click to autofill a blank field.
It’s important to note that the term “electronic signature” is often used interchangeably with a number of other terms like “digital signature” or “online signature.” While these terms are fine for use in general conversation, “electronic signature” is the only term with an actual legal definition that outlines these kinds of signatures.
Ensuring Validity Amid The Many Forms of Electronic Signatures
As mentioned above, the E-Sign Act, as well as other legislation like the Uniform Electronic Transactions Act (UETA), provide guidelines for what an electronic signature can look like and requirements for ensuring their validity.
According to the E-Sign Act, an electronic signature can be “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” This means an electronic signature can be:
- Typing your name into a blank field
- Clicking an “I Agree” field to consent to terms and conditions
- A signature made with a computer mouse or with a finger on a touch-screen
Remaining Compliant With Wet And Electronic Signatures
Now that we understand what wet and electronic signatures are, we can dive deeper into when each can be used.
When Am I Required To Use A Wet Signature?
In today’s day and age, most forms can be signed using an electronic signature. In the U.S., electronic signatures are largely permissible for most forms so long as the regulations outlined in the E-Sign Act. These include consumer consent surrounding electronic delivery and software requirements, and electronic document retention on behalf of the issuing party.
Prior to the COVID-19 pandemic, there were more identifiable exceptions to this rule, such as real estate documents and wills. The COVID-19 pandemic did change these exceptions, but largely on a state-by-state basis. E-wills, for example, are only permitted in some states and still largely require wet signatures. Real estate transactions also vary.
For the most part, though, things like promissory notes or notarized documents, documents filed with government registries, or collateral documents do still require wet signatures, depending on the state.
Maintaining Compliance With Electronic Signatures
Businesses need to remain compliant with the regulations that surround electronic signatures. For those in the healthcare industry, for example, HIPPA does allow the use of electronic signatures, and electronic signatures are used for a variety of applications in the healthcare industry.
HIPPA and the other regulations also have standards for maintaining the validity of these signatures. Generally, utilizing an electronic signature program like DocuSign is the safest way for businesses to ensure that their electronic signature process is up to par. Businesses can also implement other strategies like two-factor authentication or security questions.
Sign Here: Understanding Wet and Electronic Signatures
While modern technology has certainly made several tasks and processes easier, sometimes, it feels like using said technology is much harder than it needs to be. We’ve all spent too much time in the back alleyways of Google Drive trying to dissect why some people can access a Google Doc and others can’t or have spent an embarrassingly long time trying to get a video to play while giving a presentation. The process of signing documents electronically is no different. With the knowledge provided in this article, though, you’ll be equipped with all the knowledge you need to ensure your business stays up to date with electronic signature processes.
As a business, you’ll need to maintain compliance with a variety of different rules and regulations. Included in this is the Affordable Care Act. Learn more about what to do if your business is not compliant with the ACA.
Topics: