Matthew Kenney

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Create Energy & Exit a Rut

Posted on: 04.17.20 | by Matthew Kenney

The Niagara River flows normally for miles like many rivers. However, as the water approaches Niagara Falls it proceeds though a series of rapids; gains speed and the soars majestically off Niagara Falls to the basin below. From there the water continues its normal flow to the St. Lawrence River and its mist, on sunny days, produces beautiful rainbows.

Business is much like the water spilling over Niagara Falls. To experience the rush of exhilaration; see rainbows and experience tranquility in the future we should be willing to endure the turbulence that creates energy.

The result of this process at Niagara Falls is a natural wonder that attracts millions of visitors annually. The results for those who create energy within careers and companies is no less powerful. Think about it: All the great innovations that have advanced humankind were created by people with energy enough to put thoughts into action.

How to Create Energy

Have you ever noticed how an office, warehouse or restaurant etc. feels different when it’s busy? What you’re feeling is energy. Kinetic energy is created through motion. As you put ideas into motion, you are creating energy. Take action and you’ll create energy every time. Create energy and you’ll move forward and reach goals faster. 

Anyone can create energy as the only prerequisite is a willingness to take action. Start small by focusing on topics within your span of control and you’ll feel the energy generating. Start with something simple, but start. You’ll feel better and your career/business will move forward.

Of course, it’s difficult to generate enthusiasm when a business has been forced to shut-down, or a career has been negatively affected by COVID-19. But what choice do we have? The river has changed. Society has changed. Our economy will recover, but things will be different going forward…..and that’s OK. Let’s change with the circumstances. If we evolve, learn, and grow during this difficult time–perhaps we’ll be more prosperous when we next step into the river of commerce.

(c) Copyright 2020. All Rights Reserved.

The CARES ACT & Your Small Business

Posted on: 03.29.20 | by Matthew Kenney

If your small business has been negatively impacted by COVID-19, the CARES Act may provide you with some relief. The law dramatically reduces the regulatory process required to receive a Small Business Administration 7(a) Loan.

The CARES Act provides the Paycheck Protection Program. Under the law, qualifying business may receive a loan in the amount of 2.5 times their average monthly payroll, up to $10 million. A significant portion of the loan is forgivable if the funds are used to provide payroll for either full or part-time employees.

Effectively, the US government will provide a grant in the amount of 8-weeks of a company’s payroll (including benefits) for the period between February 15, 2020 and June 30, 2020.

Loan proceeds can be used for other qualifying reasons, such as rent; utility payments and loan interest payments. An important aspect of the CARES Act: It is available to sole proprietors, independent contractors and non-profit organizations.

The law also modifies the Economic Injury Disaster Loan (EIDL) program. Because Florida has been declared a disaster area, small business owners can apply for loans up to $200,000 without providing a personal guarantee. Larger, long-term EIDL loans, up to $2 Million, have an interest rate of 3.75%.

Loans made under the CARES Act are non-recourse, meaning borrowers will not be subject to personal liability should their business default. Application fees are waived, and interest shall not exceed 4%.

If you have any questions about how the CARES Act can help your business navigate these difficult times, please contact call Matthew Kenney at 407-693-2050.

Coronavirus and Contracts: Must You Perform?

Posted on: 03.19.20 | by Matthew Kenney

The COVID-19 pandemic has negatively affected the global supply chain. Orders are going unfilled, which means contracts terms are not being met. Does it constitute a breach-of-contract when a supplier cannot fulfill its obligations?

The answer is: It depends.

Having a signed contract is one thing. Enforcing it is another. Under Florida law, there are instances where courts will excuse a party from contract performance. Two such instances: Where it is impossible to perform; and when it is impractical to perform.

However, courts will generally not excuse a party from performing when a disruptive event is anticipated at the time of contract formation. Stated differently, a court might require a party to perform if a risk — including a pandemic and resulting national emergency — was anticipated by the parties when they entered the contract.

The question before many business owners and their legal counsel: Is COVID-19 a risk that was reasonably anticipated by the parties?

Many written contracts will have a Force Majeure (meaning “Superior Force” ) clause, which excuses a party from performance if there is an unforeseen and uncontrollable event the parties could not have contemplated during the formation of their contract. There is no doubt COVID-19’s impact on one’s business is uncontrollable. The question in a breach-of-contract lawsuit, however, might be: Was it unforeseeable?

The phrase Force Majeure is generally used in contracts as synonymous with an “Act of God”. Contract performance prevented by hurricanes, floods and tornadoes would fall easily into this category. But what of COVID-19? Was this terrible event really unforeseeable?

Although COVID-19 feels like a sucker punch to our economy, futurists have warned of the risks of potential epidemics and pandemics (just like COVID-19) for years. Bill Gates gave a TED Talk on the subject in 2015, for example. Since 2000, the world has seen outbreaks of SARS, Swine Flu, Avian Flu, MERS etc. A reasonable person could argue parties should have addressed future epidemics and pandemics in their contract terms, given the notice we’ve been given by experts about our susceptibility to such events.

The point: Do not assume the effects of COVID-19 will absolve your company from contractual liability, even if performance is impossible or impracticable. A judge might ask: “If other companies and entrepreneurs specifically addressed the issues of national emergency, epidemic, or pandemic in their contracts….why didn’t you?”

Florida courts will likely evaluate your Force Majeure clause based on its clear, unambiguous language. It’s possible Florida courts will view non-performance related to COVID-19 as unforeseeable and uncontrollable events, freeing a party from performance. It is equally possible they will not. Therefore, the best approach going forward is to ensure your contract languages addresses epidemics and pandemics in clear, unambiguous terms.

Employees, Texting & Driving: What’s Your Policy?

Posted on: 12.17.19 | by Matthew Kenney

Department of Transportation statistics suggest we spend about an hour daily driving our vehicles. Of course, much of this time is spent commuting to/from work. We also know that text messaging within companies has become ubiquitous. So, this begs the question: Might employees and employers be texting each other while driving?

If the answer to the answer is “Yes”, the next question managers should ask is “Does our company have a texting while driving policy?”

If your company does not have such a policy, it should. Texting while driving is illegal in Florida. On January 1st, 2020 a tougher law goes into effect making texting-while-driving a primary offense. Essentially, this means police officers may pull-over drivers expressly for texting.

If your employees are texting each other, while at least one is driving, your company is assuming significant risk. We know this because texting while driving is extremely dangerous. In 2018 alone, nearly 5,000 deaths; more than 1,000,000 accidents; and nearly 400,000 injuries were related to cell phone related distracted driving.

If an employee is driving and texting, and the text is related to his/job, then any accident flowing from the employee’s distracted driving would, likely, be viewed as within the scope of employment. Thus, the employer would be responsible. It’s simple negligence, really. Drivers have a duty to protect others. Texting while driving breaches that duty. If injury is caused due to this breach; and the damages are those anticipated from such a breach (e.g. personal injury, property damage etc.)…your company is negligent.

Therefore, every company should have an anti-texting while driving policy that educates employees to the risks of texting while driving; prohibits the conduct;, and reinforces the illegality of the practice. Such a policy could establish best practices for how and when co-workers should communicate. At the very least, it could encourage employees to use smartphone features that block incoming messages while driving.

Rest assured, if an employee is involved in a texting while driving accident the plaintiff’s attorney will ask about your policy and training. Protect your company. Protect your employees. Protect innocent drivers, passengers and pedestrians. Make sure your company has an anti-texting policy…and enforce it. I’d be happy to draft such a policy for you. It’s not the most challenging legal exercise, but it’s among the most important. If your HR manager chooses to draft the policy, just be sure to have your lawyer inspect it to ensure it’s aligned with Florida law.

Is an English-Speaking Only Workplace Legal?

Posted on: 12.13.19 | by Matthew Kenney

My Business Law students are often surprised to learn that the State of Florida, unlike the United States of America, has an official language: English. See Article II, Section 9 of the Florida Constitution. So, does that mean employers can require employees to only speak English at work? Generally speaking, the answer is “no”.

Florida employers who attempt to unreasonably require an English language-only workplace may experience a similar fate to the Texas resort, which recently paid more than $2.6 Million in damages for requiring 25 Hispanic employees to speak English only.

Students often ask: If English is the official language in Florida, why is requiring an English speaking workplace illegal? The reason: Such a policy violates the Federal Civil Rights Act of 1964 (and the Florida Civil Rights Act of 1992). Preventing employees from speaking their primary language is considered National Origin discrimination because language is a manifestation of one’s birthplace.

Stated differently, racist managers might try to circumvent laws against racial discrimination by prohibiting employment based on language instead. However, government agencies and plaintiff lawyers are wise to this trick. Prohibiting certain languages in the workplace is tantamount to prohibiting certain types of people, and smart people know it.

Employees should know, however, that Federal and Florida anti-discrimination laws generally apply to workplaces with 15 or more employees. Some county ordinances (e.g. Osceola and Orange) reduce the threshold number of employees to as little as 5 or 6. However, it’s still technically legal for very small businesses to require an English speaking workplace. Immoral, perhaps…but not illegal.

This is another reason why employees should consider the size of an employer (based on the number of employees) before seeking employment. Some laws apply to employers of all sizes, while other laws apply only to some employers. Likewise, employers should know what laws will apply as their businesses grow. Again, employment law is often dependent on the size of a company based on the number of workers employed, not the amount of revenue generated.

(c) Copyright 2019. All Rights Reserved.

Beware of Legal Forms

Posted on: 11.11.19 | by Matthew Kenney

Parties signing contract
Contract Formation

A key to business success is the ability to distinguish a cost from an investment. In business, we’re correctly taught to reduce costs. But how do you define costs? If you look at legal fees as a cost, you’ll seek to avoid them. One seemingly smart way of reducing legal fees is using legal forms found online. However, is this a smart idea?

Words and punctuation mean things under the law. A well-drafted business contract, therefore, is tailored to your unique situation and jurisdiction. For example, it likely has parol evidence, severability, and forum clauses inserted to protect you. Just wondering: Do you even know what parol evidence is? If not, then how will you know if a parol evidence clause is missing?

I chose three random contract concepts, but could easily rattle-off a dozen more. Any transacational lawyer could. We distinguish between applying the Uniform Commercial Code versus the Common Law; know why a contract should use Oxford commas; and explain the Latin maxim Contra Proferentem to clients on a daily basis. It’s our business. We’re experts at contract review and drafting, just like you’re likely an expert in your occupation.

Drafting and interpreting contracts is a skill developed over thousands of hours of study and practice. If you hire a transacational lawyer to review a downloaded form, we will invariably find a lot of problems with that form. Some of the boilerplate language may suffice, but we’ll find problems a non-lawyer won’t recognize. Those problems can be very costly if the form is signed and becomes a binding contract.

Whoever wrote a legal form found online — if it was even written by a licensed attorney — is not protecting you, or your business. And, you’re not protecting yourself if you incorrectly view contract drafting as a cost, rather than an investment.

Sexual Harassment, Customers and Employers

Posted on: 08.30.19 | by Matthew Kenney

Anyone who says “the customer is always right” has never had a customer. While most customers are respectful of employees, some are very disrespectful. Being obnoxious is not illegal. However, customers who sexually harass a company’s employees are acting illegally — and the employer can be made to pay.

Sexual harassment is defined by the Equal Employment Opportunity Commission as “unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.” Consider these statistics to provide some context into the pervasiveness of this problem:

  • The Association of Flight Attendants reports that 68% of flight attendants have experienced sexual harassment by fliers.
  • National Public Radio reported that 53% of hotel housekeepers have experienced sexual harassment from guests.
  • Harvard Business Review reported that 90% of female (and 70% of male) restaurant servers have experienced sexual harassment, with incidents from customers more than doubling incidents involving managers.

Unfortunately, many companies ignore such harassment as part of a longstanding “the customer is always right” culture. The customer isn’t always right, and employers have to step-up on behalf of their employees. Sexual harassment is never acceptable. Employers need to get their minds around this concept…or they’re going to lose good employees; and write big settlement checks needlessly.

Companies should have zero-tolerance policies related to customer-based harassment (and educate customers about these policies). They should empower employees and managers to confront abusive customers by denying service. Employers should keep accurate records, and create a culture where treating employees with respect is the norm.

If you are sexually harassed by a customer, you should report the incident to your Human Resource Manager. Upon notice, the company must take steps to stop the harassment. If the problem continues, you should contact an employment lawyer to put a stop to it. Alternatively, you can have your lawyer provide the notice to HR. This approach is likely to get your employer’s attention, since an employment lawyer will outline the legal ramifications should the problem continue.

Internships and the Law

Posted on: 07.31.19 | by Matthew Kenney

The issue of unpaid internships is a challenging aspect of business administration. In theory, internships provide a good opportunity for new job entrants. In practice, internships can land a company in legal trouble. Here is the key thing to remember: Under the law, your company cannot be the “primary beneficiary” of the relationship.

Legal principles behind unpaid internships in the USA date to 1947 when the Supreme Court articulated six rules employers must follow. The federal law applicable to internships is the Fair Labor Standards Act (FLSA) of 1938.

Do you see the problem? The laws were written during the Roosevelt and Truman Administrations. The FLSA has been amended several times across the decades, but we still see areas where the law is not harmonized with the market. Internship law is one of those areas.

The world has changed rapidly, but our internship laws have evolved slowly. This has proven problematic. Government has largely left the company/intern relationship to the market, which has resulted in exploited interns and lawsuits.

Today’s courts look to the following guidelines set forth by the Department of Labor, based upon Supreme Court precedent, to establish whether the company is the primary beneficiary, thus violating federal law:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship. (Source: US Dept. of Labor, 2019).

Businesses hiring unpaid interns primarily to save money would likely be in violation of guidelines #2, #3, and #4.

If your company is sued by a former intern, his/her lawyer will ask your HR Manager during deposition: “Was your primary motive to save money?” If the HR manager says “yes”, your company will likely lose that lawsuit.

Courts will look at the facts of each case and weigh the factors differently. The legal issue isn’t whether your company can benefit from the use of interns. The issue is whether your company is calling an employee an intern (to avoid paying wages).

Damages to a company from a successful employment claim may include double wages for the former intern, plus attorney’s fees. Inevitably, tax consequences and bad publicity will follow the verdict.

If you’re a business owner thinking about “bringing on interns” to save labor costs, you should think differently. Internships are not about you. Nor are they about your company, customers or profitability. Internships are about students. Your primary motive should be helping students. An ancillary benefit to your company is fine, but benefiting the company cannot be your primary motive.

If using internships as part of your business strategy, be sure to have a policy drafted by a business lawyer, who tailors the policy to Florida court decisions on the topic. Internships are an area where not knowing the law can cause a lot of problems.

(c) Copyright 2019. Matthew G. Kenney. All Rights Reserved.

Understanding Entrepreneurs

Posted on: 07.23.19 | by Matthew Kenney

While a Doctor of Business Administration student, I became frustrated during a class. My classmates were defining “entrepreneurs” broadly. I recall one classmate saying “I’ve been working with entrepreneurs for 25 years, they are all paranoid control freaks”. As an entrepreneur, I was a bit offended. But I was also curious. Was my classmate correct?

As any good doctoral student would, I researched the topic of entrepreneur personality deeply. I wrote a paper entitled “Psychographic Segmentation of the Self-Employed”. With the help of Dr. Art Weinstein (my professor and leading scholar in the field of market segmentation), we published the article in the New England Journal of Entrepreneurship.

Our research found entrepreneurs can be classified into groups. Some are altruists, others have parental relationships with their firms, some are exemplars with a talent for commerce, and some are motivated primarily by a need for control. At the very least, companies should not market to small business owners as one market. Rather, as a large market with multiple market segments.

Recently, Dr. Weinstein and I learned our article is among the most downloaded articles in the journal’s history. It’s been downloaded by thousands of people at leading companies and universities globally, and cited by numerous scholars.

My motive in writing the article was to prove education is the best cure for prejudice. Having influenced others to respect the differences between entrepreneurs, whether that influence occurs in a classroom of boardroom, is rewarding for a business educator.

However, as a lawyer there is a different benefit: Better understand entrepreneurs. An attorney who understands a client’s motives is better positioned to help the client succeed. Not every entrepreneur wants a huge business, or to build a global empire. Some just want to make a difference in their communities. Some want a lifestyle business that serves their desires, not a business that consumes their lives. That’s why I start discussions with new entrepreneurs with a simple question “What do you want from this business?” Once that question is answered, it is easier to choose the best legal structure moving forward.

Beware of Counterfeiting

Posted on: 07.14.19 | by Matthew Kenney

By some estimates, the cost to legitimate brands from counterfeiting is $1.8 Trillion annually. The cost of this intellectual property theft to American companies has been estimated at $600 Billion annually. Small Business owners are increasingly seeing their products knocked-off and sold on e-commerce platforms.

If you are a small business owner, it’s important to take the issue of counterfeiting seriously. Federal law provides remedies for victims. For example, if your registered trademark is violated — the remedy can be up to $150,000 per infringement. Courts can also order a defendant to pay your attorney’s fees; and pay punitive damages etc. 

If your company is a victim of counterfeiting, a business lawyer can help you understand your rights; and notify the proper authorities. Your lawyer will then likely connect you with a litigator. While it can be challenging to collect money from foreign manufacturers, plaintiffs may sue the US retailers and web-sites that facilitated the crime. Think about it: E-commerce billionaires, their employees and investors are profiting from the sale of counterfeit goods on their websites. Is that fair?

While buying counterfeit goods is not considered a crime, re-selling them is a crime. It’s a crime even if the re-seller does not know the goods are counterfeit. There is a Latin maxim: Ignorantia juris non excusat. Ignorance of the law is not an excuse. If you sell counterfeit goods, you’re breaking the law. Period.

Trademark and patent infringement are strict liability crimes. Intent does not matter. The act is what matters. A business owner has a responsibility to maintain the integrity of his or her supply chain. The criminal penalties for selling counterfeit goods can range up to $2,000,000 and 15 years in jail. Therefore, it’s a good idea to make sure anyone with purchase authority within your company knows the consequences of buying counterfeit goods.

Lastly, business owners have to understand: Counterfeiting is not a victim-less crime. Behind counterfeit goods there is nothing but greed, human suffering and environmental destruction. Nothing good comes from counterfeiting. It’s a scourge on society and commerce.

(c) Copyright 2019. Matthew G. Kenney

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