Noncompete agreements are unfair

As a result of noncompete agreements, many high-technology employees run the risk of being refused job opportunities in their related industry.

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As a result of noncompete agreements, many high-technology employees run the risk of being refused job opportunities in their related industry.

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Fifteen years ago, the trade magazine I worked on proved deficient in revenues and was shut down. As a result, a group of ex-employees, including myself, started a similar magazine. Needless to say, our new publication came under close scrutiny from other publishing companies. In fact, our closest competitor moved quickly to challenge us in the marketplace—not through criticism of our editorial, but by skillful methods that involved reader costs, circulation, and audits. Being a startup, we were cost-vulnerable and had to close down after publishing only three issues.

At that time, there were no noncompete agreements in existence that limited starting such a publication. Unfortunately, the same does not apply to the machine-vision and image-processing industry. Over the last few months, a number of people I know have left the machine-vision business. At the time of hiring, these individuals were persuaded to sign a noncompete agreement as a requirement for getting the job. Upon being terminated, a number of these people were told that employment with other imaging companies was not permitted, forcing these individuals to find jobs outside of the imaging field.

In the OEM machine-vision industry, which is made up of many relatively small companies, everyone knows everyone else. If you make a major mistake in your job, you should expect the consequences. But those who have been diligent should not have to worry about unfair agreements limiting their career prospects.

As a result of noncompete agreements, many high-technology employees run the risk of being refused job opportunities in their related industry. And signing such agreements limits employees from more lucrative jobs. If you work for a machine-vision systems integrator, for example, and you sign such an agreement, you may not be allowed to work for a competing company even though you have spent many years perfecting your hardware and software skills.

Some companies, however, would argue that such noncompete agreements must be part of any new job hire. The reason, they would argue, is that because the machine-vision and image-processing industry is made up of relatively small companies, competition between them is fierce. And someone leaving one company may know its complete business plan, its customers, and the new products it intends to introduce in the next few years. Therefore, some form of restriction must be placed on employees to protect the company's interests.

While this is certainly true, the number of people currently employed in machine vision, industrial automation, and image processing is relatively small. And, like other very specialized markets, it takes years to develop the technical capability to produce sophisticated image-processing hardware and software.

Worse, a number of problems already plague the machine-vision and image-processing business. Some OEM companies refuse to discuss any system solutions that they have achieved because of nondisclosure agreements with their customers. They are worried that another vendor will take their business away should it identify the customer. Then, there's the frightening aspect that someone from the Lemuelson Foundation will sue for an infringed patent.

Those with engineering talents who are laid off are being restricted though noncompete agreements to apply their design, development, marketing, or management skills in other industries. Machine-vision and image-processing companies should limit these noncompete agreements to a maximum of one year. This would allow engineers, marketers, and managers greater career freedom. And, if the employee is required to sign such a document, his or her company should be prepared to pay the employee for the length of the noncompete should any layoffs occur.

by Andy Wilson
EDITOR
andyw@pennwell.com

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