As anticipated, Governor Polis signed into law last week Colorado’s new limitations on restrictive covenants, which includes noncompetition, nonsolicitation, and confidentiality covenants.  Our Colorado employment team has already issued a legal alert that provides detail about the bill.  FAQs:  Colorado Further Limits Restrictive Covenants.

Colorado employers need to pay attention to this law.  It amends C.R.S. § 8-2-113 to substantially limit the enforceability of non-competes and other restrictive covenants for any workers other than those designated as “highly compensated.” The bill also imposes new, stringent notice requirements and penalties for noncompliance for any agreements entered into beginning in August of this year.   Some areas where employers, particularly multistate employers with workers based in Colorado, might be caught off-guard:

  1. Restrictive covenants are void unless an employer provides separate notice to workers of the terms of the covenants before they accept an offer of employment, or 14 days before the covenant goes into effect for current employees.
  2. Colorado has eliminated the most commonly used exception to Colorado’s general ban on noncompetes for executives and professional staff to executives.
  3. Colorado does permit noncompetes for highly compensated workers (currently $101,250) when the agreement is for the protection of trade secrets.

Ashley Jordaan and Chris Ottele will be hosting a free webinar on June 28, 2022 on the new law that we encourage everyone to attend: