Colorado Employment Contract: Definition, Key Considerations

What is a Colorado Employment Contract?

A Colorado employment contract is a legally binding agreement executed by an employer and a new employee. The contract lays out the rights and obligations of each party throughout the employment relationship.

It is common to find the following issues negotiated in an employment contract:

• Employee’s income
• Payment schedule
• Employee’s job title and list of duties
• Employee benefits
• Employment start date
• Duration of employment
• Procedures for discipline and grievances
• Causes for termination

Colorado is an “at will” employment state so without a valid employment contract, employers and employees are free to end the working relationship at any time for any reason. This means that an employer can terminate an employee without any reason or cause.

The only two exception to this rule are the public policy exception and the implied contract exception which are both recognized in Colorado.

Public policy exception. Prevents an employer from firing an employee if the termination involves an employee’s compliance with state laws like refusing to commit a crime.

Implied contract exception. Prevents an employer from firing an employee when an implied contact exists. This can be an oral suggestion of job security or a section in the employee handbook that outlines termination policies.

Are Employment Contracts Enforceable in Colorado?

For the most part, employment contracts are enforceable in Colorado and the contracts can either written or oral agreements. The contracts cannot violate state laws or public policy.

There are parts of an employment agreement that will not be enforced in Colorado. In August of 2022, Colorado passed a bill that severely limited the enforcement of non-compete, non-solicitation, and other restrictive employment agreements.

The new bill made the following changes to Colorado employment law:

• All non-compete agreements will be void unless they are entered into with a “highly compensated” worker. The 2022 threshold for “highly compensated” is $101,250.
• Void all non-compete agreements not designed to protect trade secrets
• Void all non-compete agreements that are more broad than necessary to protect an employer’s interests
• Void all non-solicitation agreements that are entered into with an employee making less than 60% of the salary of a “highly compensated” worker
• Require all non-compete disputes to be adjudicated in Colorado courts under Colorado laws.

What Are the Legal Requirements for Colorado Employment Contracts?

The legal requirements for a Colorado employment contract are governed by Title 8 of Colorado Revised Statutes and Colorado contract laws. The contract should contain an offer, acceptance, and consideration.

The following information should also be included in a Colorado employment contract:

• Name and address of the employer
• Name and address of the employee
• Job title and description
• Salary
• Benefits
• Company rules
• Disciplinary procedures
• Working hours
• Causes for termination

Additional clauses can and should be added to ensure that both parties know and understand their obligations in the working relationship. Employment contracts can cover most employment related issues as long as the terms do not break the law or violate public policy

Types of Colorado Employment Contracts

There are several types of employment contracts based on the type of employee a company hires and the scope of work to be completed. The three most common types of employment contracts are permanent, fixed term, and consultant agreements.

• Permanent employment contract. This contract is used by a company to hire a permanent employee with regular hours and an hourly wage or salary.
• Fixed term employment contract. Used when hiring employees who will only work for a specific period of time or to complete a specific job. This is common contract for seasonal workers or when hiring additional workers for a large project.
• Consultant agreement or freelance contract. Consultants, independent contractors, and freelancers may work for a company; however they are not considered employees. The employee contract for this type of work needs to lay out the specific roles of each party in the business relationship.