Colorado Noncompete Agreement: What's Included and Enforceability

Quick Facts — Noncompete Agreement Lawyers (Colorado)

Is a Non-Compete Agreement Enforceable in Colorado?

In Colorado, non-compete agreements are generally unenforceable unless they meet one of the few limited exceptions laid out in the new non-compete legislation that went into effect on August 10, 2022.

Although this law provides exceptions to the ban on non-compete agreements, the exceptions are very limited and Colorado laws are very worker friendly.

The new regulations include the following provisions:

  • All non-compete agreements are void unless they are entered into with a “highly compensated” worker. The 2022 wage threshold for “highly compensated” is $101,250 annually.
  • The employee must be employed for at least two years to enforce a non-compete.
  • All non-compete agreements not designed to protect trade secrets are void.
  • Non-compete agreements that are more broad than necessary to protect an employer’s interests are void.
  • Prospective workers must be provided with the non-compete agreement before they accept the job.
  • Current employees must be notified at least 14 days before signing the agreement and provided with a summary of the restrictive terms.
  • All non-compete disputes are required to be adjudicated in Colorado courts under Colorado laws.
  • Non-compete agreements are prohibited for lawyers and physicians.

Like many other states, Colorado requires non-compete agreements to be reasonable in duration and geographic scope. Courts will review the individual facts of each agreement to determine reasonableness.

Is the New Colorado Non-Compete Law Retroactive?

The new Colorado non-compete laws are not retroactive. This legislation was passed on August 10, 2022, and only applies to non-compete agreements entered into after this date. Any non-compete agreements that were executed before August 10, 2022, are still subject to the previous Colorado laws that governed non-compete agreements.

How Long Does a Colorado Non-Compete Agreement Last?

Colorado laws do not include a limit on the duration of non-compete agreements. Instead, we look at how courts have ruled on non-compete disputes to determine what is generally considered reasonable.

Based on past cases, a duration of one year for a non-compete agreement is usually considered reasonable. It should be noted that contracts with durations of up to five years have also been upheld because the reasonableness of duration will depend on the specific facts surrounding the case.

How Do You Get Around a Non-Compete Agreement in Colorado?

The laws governing non-compete agreements in Colorado favor the worker, not the employer, so there are several ways to get around or beat a non-compete agreement. If an employee can prove that the contract does not fit into one of the narrowly tailored exceptions, then the contract will be enforceable.

One exception requires that non-compete agreements must be designed specifically to protect a trade secret. Colorado statutes consider the following business information as “trade secrets”:

  • Scientific or technical information
  • Designs, processes, procedures, or formulas
  • Confidential business or financial information
  • Lists of names and personal information

Furthermore, to be considered a trade secret, the employer must have taken measures to prevent the information from becoming available to other people.

If a non-compete agreement doe does not protect a trade secret, it cannot be enforced.

What Voids a Colorado Non-Compete Agreement?

Any contract that is overly broad or unreasonable will be deemed void in Colorado. Unlike other states which allows courts to modify agreements to make them enforceable (a practice called blue penciling), Colorado does not permit this practice. If any term is unenforceable, the entire contract is determined to be unenforceable.

Additional reasons that a Colorado non-compete may be voided include:

  • The employee was not given notice about the contract.
  • The contract was not signed by the employee.
  • The employee makes less than the wage threshold that allows non-compete agreements.

Frequently Asked Questions

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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Employment

Noncompete Agreement

Colorado

Asked on Mar 31, 2021

Can I get out of my noncompete agreement?

I am looking at my options.

Donya G.

Answered Mar 31, 2021

You may be able to be released from a non compete. You would have to review the language in the non compete to see the expiration. DISCLAIMER The answers to these questions do not constitute legal advice and does not create an attorney-client relationship with the attorney and anyone who reviews these responses.

Read 1 attorney answer>

Employment

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Connecticut

Asked on Jun 3, 2023

Noncompete agreement and promotions?

I recently accepted a promotion within my company and was asked to sign a noncompete agreement. I am concerned that if I accept the promotion and then leave the company, that I will not be able to take a similar position with another company. I am also worried that if I don't accept the promotion, I may be at risk of being terminated. I need to know what my rights are and what the implications are of signing the noncompete agreement.

Thomas L.

Answered Jun 16, 2023

It depends on the terms of the non-compete and the size of your employer. Without seeing the agreement and knowing the size of your employer, I can't offer more advice.

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Employer

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Asked on Jul 6, 2023

How to draft a noncompete agreement?

I am a business owner who is looking to hire a new employee and I want to ensure that my business does not suffer from any competition that the employee might bring in the future. I need to know how to draft a noncompete agreement so that I can protect my business from any potential risks.

Daniel D.

Answered Jul 21, 2023

Some things that would be relevant to know are: what industry are you in? What specific competition are you worried about? Are you going to include non-disclosure provisions, no-solicitation provisions or non-circumvention provisions? What risks are you specifically worried about?

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Asked on Apr 15, 2021

Can I work for a competitor with my current noncompete?

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Jane C.

Answered Apr 16, 2021

I suggest that you have an attorney review the entire agreement. It is hard to comment reading a paragraph taken out of context. From the limited facts you present, it seems that you cannot accept this job offer without violating the terms of the non-compete. Disclaimer - This information is provided for general informational purposes only. No information contained in this post should be construed as legal advice and does not establish an attorney-client relationship.

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Asked on Jan 19, 2025

Can my employer enforce a non-compete agreement if I was laid off due to COVID-19?

Can my former employer legally enforce the non-compete agreement I signed when I was hired, considering I was recently laid off due to the economic impact of COVID-19 and the agreement seems to restrict my ability to find new employment in my field? I have been actively seeking new job opportunities in the same industry, but potential employers are hesitant to hire me due to the non-compete agreement, which restricts me from working for competitors or starting my own business in the same field for a certain period of time. I want to understand if the non-compete agreement is still valid and enforceable given the circumstances of my layoff and the current job market conditions.

Merry K.

Answered Jan 28, 2025

I'm sorry, but your question is impossible to answer without reviewing your contract and knowing more about your type of job and compensation. Be aware that terms in such agreements are often found to be non-enforceable. You can start by reviewing the Washington State law on point: https://app.leg.wa.gov/rcw/default.aspx?cite=49.62&full=true

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