Colorado NDA Enforceability: Updated Rules

NDAs in Colorado

Non-disclosure agreements are widespread in Colorado's technology, aerospace, natural resources, and outdoor recreation industries. With a growing startup ecosystem along the Front Range, NDAs play an increasingly important role in protecting proprietary business information.

Colorado's Legal Framework

Colorado follows the Colorado Uniform Trade Secrets Act (C.R.S. Section 7-74-101 et seq.) for trade secret protection. NDAs provide contractual protections that supplement this statute.

Significantly, Colorado enacted HB 22-1317 (effective August 2022), which reformed the state's approach to non-compete agreements and related restrictive covenants. While the law primarily targets non-competes, it imposes new requirements that may affect certain NDA provisions, particularly those that restrict competitive activities.

Enforceability Factors

• Protection of trade secrets — The NDA must protect information that qualifies as a trade secret under the Colorado Uniform Trade Secrets Act. This requires the information to have independent economic value from its secrecy and to be subject to reasonable protection efforts
• Compliance with HB 22-1317 — If the NDA contains provisions that restrict competitive activity, it may need to comply with the new law's requirements, including notice provisions and income thresholds
• Reasonable in scope — Colorado courts evaluate whether the NDA's restrictions are proportional to the interest being protected
• Supported by consideration — Employment or access to trade secrets generally provides adequate consideration

Red Flags

• The NDA restricts competitive activities without meeting HB 22-1317's notice and threshold requirements
• Confidential information includes general business practices or publicly available data about Colorado's market
• There is no exception for Defend Trade Secrets Act (DTSA) whistleblower immunity
• The agreement has no time limitation for any category of information

When to Consult a Lawyer

Consider consulting a Colorado attorney to determine whether your NDA is subject to HB 22-1317's requirements, especially if the NDA contains provisions that could be interpreted as restricting competitive activities. The 2022 reforms added significant new protections.

This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.