The State of Colorado Non-Compete Agreement: Understanding Its Implications

If you are an employee or employer in the state of Colorado, it is important to understand the legal implications of non-compete agreements. A non-compete agreement is a legal contract between an employee and employer that restricts the employee from working for a competitor after leaving the company.

In 2018, the state of Colorado passed a law that significantly restricted the use of non-compete agreements for certain employees. The law states that non-compete agreements are not enforceable for employees who make less than $42,500 per year, are hourly workers, or are laid-off employees. This was done to protect low-wage workers from being unfairly restricted from finding employment in their chosen field.

However, non-compete agreements can still be enforced for certain employees, such as executives, salespeople, and employees who have access to trade secrets. For these employees, non-compete agreements are still legally binding in Colorado.

It is important to note that the burden of proof falls on the employer to prove that the non-compete agreement is necessary to protect their legitimate business interests. This means that employers must be able to show that the non-compete agreement is not overly restrictive and is essential for protecting confidential information, trade secrets, or other legitimate business interests.

If a non-compete agreement is found to be overly restrictive or not necessary to protect legitimate business interests, it may be deemed unenforceable by a court. Employers who violate the non-compete agreement may be subject to legal action, including damages and injunctive relief.

Overall, the state of Colorado has taken steps to protect low-wage workers from being unfairly restricted by non-compete agreements. However, for certain employees, non-compete agreements are still legally binding and must be carefully crafted to protect legitimate business interests without overly restricting the ability of employees to find work in their chosen field. It is important for both employers and employees to understand the legal implications of non-compete agreements in Colorado.